This story has been updated since it was first published on Feb. 7
Look for recent steep hikes in metals prices to go into reverse by spring, as investors’ expectations run up against economic realities: A pokey U.S. economic recovery and waning demand from China, which had been stockpiling bargain priced supplies.
Manufacturing and other industrial use of metals will remain tepid. Meanwhile, even China’s voracious purchases of metals that boosted prices by 50% or more since fall won’t be enough to sustain further price run-ups, given the abundant supplies of metals. Nickel supplies, for example, are at about a 20-year high. China’s new, tighter bank lending policies and a strengthening dollar will further restrain metals usage and prices.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Moreover, the recent commodity rally sparked by fears of possible debt repayment defaults by Greece and Portugal will run out of gas soon; it’s just a hiccup in the overall trend of sliding metals prices.
Prices for nickel will slip 20% by fall, while aluminum and copper prices will tumble 25%. The decline for zinc prices should be around 15%. That’ll put prices back in the neighborhood they were in last fall for a few months, before they head up again around November in anticipation of a stronger 2011 economy.
Still, the average price this year will run much higher than last year, up about 10% for nickel, 20% for aluminum, 25% for copper and around 45% for zinc, mainly because prices early in 2009 crashed in the wake of a recession-induced selloff.
For steel, the opposite scenario: Prices will move modestly higher through June, due to a surge in prices that took hold last fall for scrap metal and iron ore. This was largely China’s doing, too. Its industries went on a buying binge for low-priced scrap that’s made into new steel in electric furnaces.
“There is great suspicion that China acquired vast amounts of iron ore so come March when (world) prices are negotiated, China can drop out of the market entirely and use its leverage” to secure lower prices, says John Anton, a steel analyst with IHS Global Insight.
For weekly updates on topics to improve your business decisionmaking, click here.
-
Don't Overpay the IRS: 6 Tax Mistakes That Could Be Raising Your BillTax Tips Is your income tax bill bigger than expected? Here's how you should prepare for next year.
-
Flashback Finance: The Cost of Retiring the Year You Were BornJust like groceries, gas and home prices, the cost of retiring is subject to inflation. Here is a look at what it cost to retire in the year you were born.
-
How One Hospital Visit Overseas Could Wreck Your FinancesProper planning can give you peace of mind and protection, regardless of what happens on your trips.
-
Humanoid Robots Are About to be Put to the TestThe Kiplinger Letter Robot makers are in a full-on sprint to take over factories, warehouses and homes, but lofty visions of rapid adoption are outpacing the technology’s reality.
-
Trump Reshapes Foreign PolicyThe Kiplinger Letter The President starts the new year by putting allies and adversaries on notice.
-
Congress Set for Busy WinterThe Kiplinger Letter The Letter editors review the bills Congress will decide on this year. The government funding bill is paramount, but other issues vie for lawmakers’ attention.
-
The Kiplinger Letter's 10 Forecasts for 2026The Kiplinger Letter Here are some of the biggest events and trends in economics, politics and tech that will shape the new year.
-
Disney’s Risky Acceptance of AI VideosThe Kiplinger Letter Disney will let fans run wild with AI-generated videos of its top characters. The move highlights the uneasy partnership between AI companies and Hollywood.
-
AI Appliances Aren’t Exciting Buyers…YetThe Kiplinger Letter Artificial intelligence is being embedded into all sorts of appliances. Now sellers need to get customers to care about AI-powered laundry.
-
What to Expect from the Global Economy in 2026The Kiplinger Letter Economic growth across the globe will be highly uneven, with some major economies accelerating while others hit the brakes.
-
The AI Boom Will Lift IT Spending Next YearThe Kiplinger Letter 2026 will be one of strongest years for the IT industry since the PC boom and early days of the Web in the mid-1990s.
