FXStreet notes that current trends in the base metals markets are complex and rely more on macro-economic developments rather than fundamental drivers. The economic recovery expected in the coming months is set to support a strengthening of the sector in 2021, according to strategists at ABN Amro. 

“Recent positive macro-economic trends in China and its massive infrastructure stimulus package underpins market sentiment. Chinese imports of metals has remained relatively strong, implying a high need for raw materials for its manufacturing sector.”

“The uncertainty over the ultimate economic impact of the second wave of coronavirus remains high. Next to that, there are no deficits in base metals markets anymore and inventories are relatively high. This also overhangs the base metals complex and increases price volatility.”  

“A further increase in this Chinese demand and solid macro-economic data going forward is likely to keep a floor under most base metals markets.”  

“For 2021, global economic growth will show a recovery from current lows and base metals prices will strengthen further on this. Prices will also find support the trend in the dollar. A weaker dollar during 2021 makes metals cheaper for non-dollar holders and supports prices.”