May 2022 was an unkind month for commodities, especially base metals like Copper and Aluminium. @JayG, Dhan’s Founder, opined that several factors have led to falling base metal prices.
Why are Base Metal Prices Falling?
The price of base metals has been dragged down heavily by inflation. However, India isn’t the only economy that’s struggling with rising costs. The Eurozone is also experiencing a marked surge in inflation.
In fact, inflation in the Eurozone was a staggering 8.6% in June 2022, a record high that’s made the region prone to surging energy and food prices.
Not to forget, the US, one of the major players in the base metals industry, is already trying to curb rising prices and 40-decade high inflation by pulling back liquidity.
That’s why inflation as a whole may have led to a global slowdown in a world, which is far more interconnected than ever. Moreover, businesses focusing on clean energy are also experiencing a slowdown.
This may have dragged aluminium and copper prices as both base metals are a part of the top raw materials consumed by the companies operating in the clean energy industry.
One-sided buying in base metals seems to be approaching a full stop unless the geopolitical scenario eases down.