U.S Industrial Metals Glows: Perfect Time to Trade

www.ferro-alloys.com:  If we talk about the economy, so the Industrial Minerals comes in the mind as the constant building blocks of the economy. Even though global concerns have added an element of uncertainty to the outlook, there are plenty of reasons to be optimistic about the industrial metals industry over the long term.

Donald Trump has become the hope of the industrial metals market. He already has $500 billion infrastructure plan provides opportunities for the industrial metal market. Donald Trump’s promise to revive American infrastructure means commodities used to build everything from airports to bridges will gain under his presidency.

On the demand side, aluminum consumption is expected to improve worldwide, spurred on by the automotive and packaging industries – the key end markets. The automobile market is becoming increasingly aluminum-intensive, given the metal's recyclability and light-weight properties.

Automakers consumed a record amount of aluminum last year as plummeting prices and technological breakthroughs made it a viable alternative to steel. The global push to improve fuel efficiency in vehicles is anticipated to more than double the demand for aluminum in the auto industry by 2025.

Additionally, the acquisition of Tital, the Germany-based leading provider of titanium and aluminum structural castings, has strengthened Alcoa’s position to leverage growth in the commercial aerospace sector and, consequently, capture rising demand for advanced jet engine components made of titanium.

The housing and construction sector is the largest consumer of steel today and, consequently, of iron ore. Building construction (pipes and wires) is also the largest market for copper. An uptrend has been noticed in real estate activity, like new home initiatives and construction spends, in the U.S. in the past few quarters. Long-stalled construction projects are being renewed. Requirements for emerging projects, such as education facilities and government buildings, are also creating demand in the sector.

In the long term, as the urban population increases worldwide, so will the need for steel with the need to build skyscrapers and public transport infrastructure. Emerging economies will also continue to be major demand drivers to support increasing urbanization and industrialization. Naturally, a rebound in construction bodes well for the iron ore and copper industries.

Copper is a major industrial metal playing a particularly important role in emerging countries. Given its varied applications, the trends in the copper market are often considered useful indicators of the state of the global economy.

Developments in the world economy are strongly correlated with movements in copper prices. Given that China accounts for the largest share of global copper consumption as well as having a large share in the total production of pure copper, it’s no surprise that there is a strong correlation of the metal with ups and downs in China’s economy.

In the long haul, expectations of a rising middle class in Asia, particularly in India and China, who will spend more on consumer goods such as air conditioners and refrigerators in the years to come, will stimulate demand for copper. Chinese demand for the metal will likely grow to comprise 46% of the worldwide copper consumption by 2018.

As per the World Steel Association, India’s prospects look bright due to consumption-boosting reforms and favorable policies to improve infrastructure and manufacturing output. Also, IMF projects India’s GDP growth to rise to 7.2% this year. Given that India's consumption of metals has almost doubled over the past 20 years, it will be a major consumer in the years to come.

• [Editor:Zhao Xiaobo]