Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

With many economies across the country recovering from the impact of the COVID-19 pandemic, base metal consumption is expected to rise. As a result, market participants expect prices for base metals to continue their uptrend into 2021. Demand could outpace supply, thus, leading to a shortage in the global market.  


In early 2020, prices of base metals like aluminium, nickel, copper, and zinc were severely hit due to the COVID-19 pandemic-induced lockdowns. Industrial activity, especially between April-June in most countries remained hampered as governments tried to contain the spread of the virus. Subsequently, base metal markets rallied as demand gained momentum led by increased consumption in China. Economic activity in major consumer countries in Europe, as well as the US, also revived. But the second wave of COVID-19 pandemic in Europe, especially the UK is likely to hit consumption.


In 2021, the increase in base metal prices have been driven by hopes of a rebound in global growth aided by the rollout of COVID-19 vaccines and the weakening US$, said Ravindra Rao, VP-Head Commodity Research, Kotak Securities, in an exclusive conversation with Davis Index.

Vaccine rollouts in many countries could boost revival in global economic activity which in turn could fan demand outlook for base metals. The Chinese economy is expected to rise at a higher pace than others, leading to a bullish demand for metals, shared Rao.

Increased infrastructure spending supported by stimulus packages by governments of major economies could also support growth. Moreover, the expectation of industries shifting to clean energy in the US under Joe Biden’s presidency may spur demand for metals like copper, nickel, and zinc, he added.


Global central banks are boosting infrastructural expenditure to help economies tide over the economic turmoil which could improve demand outlook for industrial metals, corroborated Yash Sawant, Research Associate, Angel Broking Ltd.

Along with the sustained expansion of the Chinese economy, booming demand from the electric vehicle (EV) sector is also a supporting element for the base metal prices rising, Sawant further said.


According to his estimates that prices of aluminum in India will trade higher towards Rs205,000/mt in the coming months, while copper prices are projected to rise towards Rs700,000/mt in 2021.

Zinc prices in 2021 are expected to rise to Rs270,000/mt, while prices of nickel are likely to touch Rs1.6mn/mt in the next 12 months in India.



Rao cautioned that although demand for base metals is poised to grow in 2021, supply will remain uncertain.  

COVID-19 vaccines are at present accessible to consumer nations like the US, European countries, and China. It could be months before these vaccines are made available in top base metal producing countries like Chile, Peru, Bolivia, Indonesia, Philippines. In the meantime, should there be a re-imposition of lockdown measures due to a spike in COVID-19, supply could be disrupted.

Importers in India told Davis Index that base metal markets will remain bullish for the next few months as most European nations are under lockdown because of the new strain of COVID-19. But there could be a correction in base metal prices on the LME in three months if the vaccine rollout is successful. Logistical problems due to container shortage, are also likely to disrupt the supply chain and availability of base metals in India, supporting the rising prices of base metals.


($1 = Rs73.4047)


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