Whilst precious metals have been on a strong upward trajectory so far in 2024, it’s been far more of a mixed basket for base metals. Copper has been a rare bright spot, even after falling back from record highs earlier in the year. Copper’s crucial role in the green energy transition and rising use in AI applications has seen its demand grow and price rise by 9% year-to-date.
The only other base metals to surpass copper’s performance were tin and zinc. The price of tin is benefitting from booming demand for its use in electronics manufacturing and energy storage solutions whilst facing constrained supplies. Tin has appreciated in value by nearly 25% year-to-date. Supply constraints have been the primary driving force behind zinc’s 12% return.
Source: Trading Economics (Commodities Overview)
Leading the laggards is iron ore, down nearly 25% year-to-date, hit hard by weakening demand from its largest consumer, China. Nickel, down nearly 2%, has faced headwinds following a challenging 2023, with oversupply from Indonesia partially offset by an improving demand outlook. Lead prices have been treading water, more or less flat for the year, as the EV transition reduces traditional lead-acid battery usage.
Source: Trading Economics (Commodities Overview)
The demand outlook for base metals hinges heavily on potential stimulus measures from China and the trajectory of US/China relations once Donald Trump returns to office in January next year. If trade tensions escalate, a tariff war could dampen economic activity, leading to weaker industrial demand for base metals, particularly from China.
On the other hand, as interest rates decline across Europe and the US, industrial demand may be poised for a resurgence. Certain metals, particularly copper, are especially well-positioned due to a combination of historic underinvestment in new projects and rising demand from the green transition. Prices hit record highs in 2024, and most analysts expect further price appreciation in the coming years.
Source: Financial Times
In this article, we will take a closer look at some mining heavyweights and mining juniors listed on the UK markets, in order to assess which companies might offer the best exposure to certain base metals.
BHP (LON:BHP)
