Metals prices were down across the board for June, according to the E&MJ Price Index. Lithium hydroxide and gold suffered the least with 1.6% and 1.7% losses, respectively. Base metals were clobbered with the biggest losers being tin (-24%), nickel (-20.4%), zinc (-19.5%) and copper (-15.9%). Iron ore, cobalt and platinum also posted double-digit losses of -17.4%, -16.8% and -12.8%, respectively.

Among the precious metals, gold remained steady dropping $31.60 per ounce (oz) from $1,844.60/oz to $1,813/oz. That’s what it’s supposed to do, especially as inflationary pressures grow and foreign exchange rates slide against a stronger U.S. dollar. Silver on the other hand dropped 8.6% from $21.78/oz to $19.91/oz. Among the platinum group metals, palladium only lost $86/oz dropping from $2,030/oz to $1,944/oz. Platinum declined $129/oz, falling from $1,006/oz to $877/oz.

Much of the June carnage took place among the base metals. Aluminum prices dropped 9.5% or $260 per metric ton (mt) from $2,724/mt ($1.24/lb) to $2,464 ($1.12/lb). Copper prices dropped from $9,520/mt ($4.33/lb) to $8,006/mt ($3.64/lb). Lead prices declined 9.2%. Nickel, tin and zinc dropped $5,771/mt, $8,392/mt and $754.50/mt. Iron ore dropped from $138.50 per dry metric ton (dmt) to $114.45/dmt.

Many analysts attributed the downturn to the Chinese lockdowns. China represents 50% or more of base metals and iron ore offtake. Meanwhile, Russian metals have continued to flow, while supply chain bottlenecks have weighed on autos output, according to Morgan Stanley Research. The firm said it sees a bit more pain before the gain especially with the situation in China, where an exit from COVID-zero likely some time away.

Aluminum sits at the top of Morgan Stanley Research’s order of preference, with many downside risks having played out and a still challenging energy situation, not just in Europe. The Morgan Stanley team expects copper to underperform aluminum, on lower Chinese demand plus supply growth coming through. They are turning neutral on iron ore, expecting current market tightness to ease, mainly driven by China’s steel mills putting the brakes on their elevated output levels through the second half of 2022.

Gold looks overvalued versus recent moves in real yields, according to Morgan Stanley Research, although some support is coming through from still strong inflation and rising risks of recession, and sentiment could turn if rate expectations start to reverse. The thermal coal market is likely to tighten further, and they see a higher price for longer. Zinc moderates with European smelter margins normalizing.

On the negative side, a more material slowdown in global economic growth, a new wave of COVID-19 infections or a stronger U.S. dollar would reduce commodity prices below Morgan Stanley Research’s base case. On the positive side, further and more permanent supply disruptions from geopolitical and social conflicts may push prices above its base case.

The Morgan Stanley Report: A Bit More Pain Before the Gain (June 22, 2022) can be found at