Gold prices weakened during June, falling 6.7% to $1,776.70 per oz (oz). Silver followed a similar trajectory, declining 6.8% to $26.03/oz. The two precious metals were probably most affected by the U.S. Federal Reserve’s policy meeting, where the central bank suggested rate hikes beginning in 2023, rather than 2024 as previously projected.
All the platinum group metals (PGMs) pulled back during June, platinum declined 7.8% to $1,094/oz, followed by palladium (-1.1%, $2,798/oz), rhodium (-22.7%, $19,700/oz) and ruthenium (-6.3%, $750/oz). While prices for precious metals and PGMs cooled during June, they remain closer to historic highs than historic lows.
Non-ferrous base metals were a mixed bag. Copper dropped below the $10,000/mt level, but remained comfortably above the $4/lb mark at $9,835/mt or $4.47/lb. Lead and aluminum increased 5% and 4.9% respectively during June. Nickel improved 3.6% while zinc declined 3.4%. Tin was flat for the month.
Tin prices, however, remain at 10-year highs. During June, Roskill reported that the Kuala Lumpur Tin Market halted trading, following the suspension of Malaysia Smelting Corp.’s (MSC) Berhad operations. The Malaysian government announced a third Movement Control Order, a strict partial lockdown, and MSC declared force majeure. The tin market is expected to remain tight.
Prices for minor metals are trending higher. During June, the 3-month forward contract price for Molybdenum climbed from $13.83/lb to $20/lb before settling at $19.28/lb at the end of the month, a 39.2% increase. Cobalt prices climbed to $48,500/mt from $43,615/mt, an 11.2% increase.
Prices for iron ore climbed to new highs during June, increasing 3.8% to $213.59 per dry metric ton. In a recent weekly commodities report, Fitch Solutions said they believe Chinese ferrous metals demand, especially steel and iron ore, for its domestic construction industry (approximately 50% of Chinese steel demand) has peaked in H1 2021. They are predicting steel consumption in China to grow by 10% y-o-y in 2021 and 5.5% y-o-y in 2022.
Morgan Stanley Research offered a rosier outlook for base metals. In a recent report, they said they have an attractive view of the metals and mining industry, reporting “Our economics team sees above-consensus 2022 GDP growth globally (4.8%) and in China (5.8%),” which would bode well for commodities.
They compared today’s market with 2004, January-August specifically, as it represented a ‘choppy pause’ in an ongoing bull market (or the Supercycle as it was affectionately known back then). Morgan Stanley Research said, “We expect the [metals and mining] sector to resume its outperformance, similar to what happened in late 2004, supported by strong balance sheets and attractive valuations, combined with a strong global capex recovery leading to robust global growth.”