Surge in Base Metals Leading to Higher Value of Mining Stocks

Published Date : Mar 09, 2016

Infrastructure development has boosted the growth of the global base metal mining market. Zinc-lead, copper, nickel, tin, and aluminium are the key base metals in the market. In 2014, aluminium accounted for the largest share in the market owing to its extensive usage across various applications such as consumer durables, machinery equipment, transportation, construction, packaging, and electrical systems. Zinc is another most widely used metal due to its galvanizing properties and the capability to bond with other metals. The rapidly growing portable batteries market has been driving the demand for lead while the rising requirement for copper in power infrastructure has augmented the copper market. Corrosion is the major issue with base metal applications.  

Copper Valuation Increases over Chinese Speculation

Lately, the valuation of industrial metals has been strengthened by stronger equity markets across the globe, a softer Dollar, and rising oil prices. According to the BI Metals Mining and Steel Aggregate Index for this week, the copper suppliers such as Teck Resources, First Quantum Minerals, and Freeport-McMoRan are among the gainers. Copper has climbed the highest in around four months. The rise in copper shares can be attributed to the speculation among investors that China would announce measures to boost its economic activity. It is to be noted that China is the largest consumer of copper across the globe. 

Industry analysts have pointed out that the upswing in the valuation of copper has been overdue and the cycle of copper restocking will be on its way soon. However, manufacturers are expected to buy cautiously. Owing to production cuts, copper and zinc are expected to lead the market. Some of the bigger players in the market are going out of business and this will cut the supplies. Industry experts are hopeful that the commodity prices would recover in future with oversupply going away.