Indicators of Weakening Metal Market Conditions

John Robertson


At the end of May, the gap between current metal prices and the historical benchmark against which PortfolioDirect judges cyclical positioning (see chart) had widened. The flow of metal usage statistics (see livewire from 7 days ago (VIEW LINK) ) indicates a rising chance that usage growth in 2015 will be below average and possibly negative. The widening spreads between cash and forward prices during May (see chart) are consistent with weakening market conditions. The upward trend in the US dollar (see chart)also implies reduced scope for prices to rise unless they are simply adjusting to having previously overshot on the downside, as in the cases of iron ore and crude oil. Those other commodities on a more mature cyclical path appear unable, for the time being, to withstand the pressures. 

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John Robertson
John Robertson

John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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