Metals firm up, oil surges as global economy reopens

Metals and crude oil prices rose on Monday on the expectation of a recovery in demand following the gradual re-opening of global economy and stronger manufacturing data from China, the world’s largest consumer.

The price of copper for delivery in three months jumped 0.7 per cent to trade at $5,415 a tonne on the benchmark London Metal Exchange (LME) on i ncreased demand from traders and stockists. Nickel also jumped 1.3 per cent to trade at $12,490 a tonne in the early trade. On the Multi Commodity Exchange (MCX), crude oil for delivery in June surged 4.13 per cent to quote at ~2,670 a barrel in the l ate afternoon trade. Following uptrend on the benchmark LME, metals prices jumped on the MCX, as well.

Following industrial metals, silver, too, moved up and the price hit its highest level in over six months. Silver for delivery in July rose 0.32 per cent to trade at ~50,280 a kg on the MCX.

“After months of lockdown to prevent the spread of coronavirus, the global economy is gradually opening up which raised hopes for a revival in the demand of both metals and crude oil. During this lockdown period, both construction and industrial activities came to standstill. Thus, the demand for industrial metals was severely hit. Also, closure of the transportation system reduced global demand of fuel. But, their demand is set to revive now with economies opening up,” said Naveen Mathur, director (commodities and currencies), Anand Rathi Shares and Stockbrokers.

After hitting a 10-week high of $5,457.5 a tonne on May 21, copper had declined amid uncertainty over a revival in the global economy. Now, its price has started firming up again. The gradual opening up of the global economy has revived hopes for a resurgence in its use in the construction and power sectors, which use around two-thirds of global copper production.

Analysts, however, say the Covid-19 pandemic has inflicted permanent damage upon the global economy but hopes are alive for activities to return to normal with countries pumping in fresh money into the system through quantitative easing. Many developed and developing economies, including India, China, Japan, and the United States, have announced stimuli worth billions of dollars.

“Base metals and energy also got support from United States President Donald Trump apparently softening his stance on the Us-china trade war. The markets were expecting some tough stance and hard talks by the US president with some trade-related strong measures on Friday. But, nothing was concluded from his talks. Hence, the markets perceived it as supportive for base metals and energy,” said Priyanka Jhaveri, assistant vice president, Kotak Securities.

The markets had feared any tariff row would undermine the already dampened global economy and further weaken the metal’s demand.