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We are pleased to present an overview of the international non-ferrous metals trend and changes from October 7 to 11, 2024.

LME Trend for the Second Week of October 2024

Reasons for the Changes

The fluctuations in the LME from October 7 to 11, 2024, are the result of various factors including global economic conditions, supply and demand, and geopolitical factors. During this period, the values of key metals traded on the LME experienced fluctuations due to various reasons, which are analyzed in detail below.

1. Impact of Global Economic Uncertainty

The global economy is still facing uncertainties due to inflation and rising interest rates. In particular, the U.S. Federal Reserve's (Fed) monetary policy has had a significant impact on the metals market. Early October saw strong employment growth in U.S. economic indicators, which reinforced expectations that the Fed would maintain its tightening policy for the time being. These expectations of rate hikes strengthened the value of the dollar, and the value of raw materials came under downward pressure due to the stronger dollar. Especially, the value of industrial metals like copper and aluminum showed a downward trend due to these effects.

2. China’s Economic Slowdown and Decline in Demand

China, being a major consumer of metals globally, has a crucial impact on LME prices. Since 2024, China's economic recovery has been slower than expected, and early October saw Chinese manufacturing indicators fall short of expectations. This raised concerns about a slowdown in metal demand, contributing to the decline in values for raw materials like copper and nickel. The sluggish real estate market in China also influenced this decline in demand.

3. Supply-side Factors: Energy Costs and Production Expenses

The fluctuations in global energy prices also influenced the metals market. Early October saw volatility in the prices of crude oil and natural gas, which impacted the cost of metal production. Energy-intensive metal production, particularly in aluminum, is very sensitive to changes in energy prices. Although the energy crisis in Europe has somewhat stabilized, supply chain instability remains, leading to an increase in production costs for certain metals and consequently affecting their values.

4. Nickel and Electric Vehicle Battery Demand

Nickel, in particular, is a key raw material for electric vehicle (EV) batteries, so the growth outlook for the EV industry plays a significant role in nickel prices. Early October saw some EV manufacturers lower their production targets, which dampened expectations for nickel demand, resulting in weaker values. However, in the long run, the growth of the EV market is expected to continue, and nickel prices are likely to rebound.

5. Geopolitical Risks and Instability in the Metals Market

Geopolitical risks also played a significant role in metal values. From October 7 to 11, tensions between Israel and Palestine escalated again, creating instability in the Middle East, which impacted global markets. This geopolitical tension heightened risk aversion among investors, leading to increased inflows into safe-haven assets, which in turn led to the withdrawal of speculative capital from the metals market. While the metals market as a whole weakened, traditional safe-haven assets such as gold remained relatively stable.

6. Impact of Inventory and Futures Trading

LME inventory levels also had a significant impact on metal values. From October 7 to 11, the decline in some metals' inventories supported their values. In particular, the reduction in copper inventories briefly highlighted concerns about supply shortages, helping stabilize copper prices. However, with speculative selling still prevalent in the futures market, the upward trend in metal values remained limited.

Conclusion

The fluctuations in the LME from October 7 to 11, 2024, were influenced by various factors, including global economic uncertainty, China’s declining demand, energy price volatility, and geopolitical risks. The metals market is expected to remain volatile for the time being due to these complex factors, with U.S. monetary policy and China’s economic conditions being key variables influencing future metal prices.

This analysis provides important insights for understanding future trends in the metals market and will be useful for developing trading strategies.