Metals are finding favor again after a punishing 2022 that saw most notch large losses. An improving picture for Chinese demand is coinciding with investor bets on less aggressive rate hikes by the Fed, boosting the growth outlook while weakening the dollar in which commodities are priced.

Market moves may be exacerbated by low exchange stockpiles, after supply was hobbled last year by the energy crisis. On Monday, copper climbed to the highest since June, while aluminum and rose more than 4% and zinc surged over 6%.

Metals should rally as Chinese demand picks up after the Lunar New Year holidays later this month, Goldman Sachs Group Inc. analysts including Jeffrey Currie said in a note. There’s “significant price upside,” given extremely low global stockpiles of metals, they said. 

Eoin Treacy's view

China’s swing from strict quarantine protocols to laissez faire measures is characteristic of the binary decision making inside authoritarian regimes. The focus is no longer on social control. Instead, we are back to business as usual which infers infrastructure development and property speculation.

Copper is the clearest price series to monitor enthusiasm towards China’s reopening. The price broke through $4 today, to hit a new six-month high and to extend the recovery.
The Blackrock World Mining Trust is trading at a 1.7% premium to NAV. The price has been ranging below 800p since 2008 and a sustained move above that level would clearly signal a return to demand dominance beyond the medium-term trend up from the 2020 lows.