Following a strongly inflationary metal environment in Q1, Q2 2022 is looking like a whole different ballgame.
A recent Capital Economics note to clients phrases it particularly well, stating that “all three of the world’s major economic blocs are now facing significant headwinds.” In the US, the storm stems from an increasingly-hawkish Federal Reserve.
The Omicron variant is by far the biggest wave of infections to hit China, a country still woefully under-protected in terms of vaccines.
Meanwhile, fewer young buyers than ever before seeing any benefit to investing in the property market.
In fact, the Caixin purchasing manager’s index slid to 48.1, its lowest reading since the first pandemic wave in early 2020.
Regardless, if China’s economic growth slows and industrial and construction demand weakens, the metals forecast from the world’s largest consumer will weaken as well.
Aluminum has followed copper’s lead despite a March surge caused by the EU’s rejection of Russian supplies.
As activity in all three regions continues to slow, demand for industrial metals is likely to ease.