Soaring energy prices have given a renewed boost to industrial metals prices in recent months but, if we are right, and power costs ease back from April, we think prices will fall sharply later in 2022. After all, demand for metal from key consumer China has already fallen a long way and is likely to remain subdued throughout the rest of the year, particularly in the metals-intensive construction sector. Meanwhile, tensions between Russia and Ukraine have been stoking self-haven demand for precious metals. However, assuming there are no-long lasting repercussions, we think prices will fall as rising US real yields will curb investment demand and result in a somewhat stronger US dollar.
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