Base Metals Winners In 2013

Our Commodity & Energy Strategy service is looking to upgrade base metals from neutral to overweight soon, as evidence accumulates that Chinese growth is in a sustainable upswing. But which base metals should fare the best?

Base Metal Winners In 2013

C hina bears dominated in 2012. But a glance at the performance of base metals, an asset class closely tied to the health of the Chinese economy, tells a different story.

Tin, a metal widely used as solder in the electronics industry rose 21%. This makes sense given the 12% growth in cell phone usage over the past year, and similar strength in the adoption of PCs, TVs and other electronics. Closely following tin are lead and zinc, two metals that are tied to the booming automotive and infrastructure industries, respectively.

According to our commodities team, 2013 could be the year for copper and nickel.

  • First, many Chinese indicators have bottomed and/or are now inflecting higher and nickel has one of the highest sensitivities to a rising Chinese PMI.
  • Second, the supply stories for both metals are much less bearish than their performance rankings in 2012 would imply, suggesting some mean reversion.

Bottom Line: Nickel should shift from laggard in 2012 to leader in 2013H1, while copper should also outperform over a one-year horizon.

Print Friendly
About BCA Research

BCA Research is a world leading provider of independent investment research. Since 1949, the firm has provided its clients with leading-edge analysis and forecasts of the major financial markets, with clear and focused investment strategy recommendations and backed by countless proprietary models and leading indicators. Asset class coverage includes equities, fixed income, currencies, real estate, commodities and geopolitics. The firm provides its services to financial professionals across six continents, through a wide range of products, services, and meetings. BCA maintains a head office in Montreal, with local offices in New York, Los Angeles, London, Hong Kong, Sydney, and Buenos Aires. Not yet a client of BCA? Take a short trial to our research.