Base metal prices rallied strongly from March through late May but have corrected sharply lower through the first half of June amid rising visible inventories and increasing concerns about the strength of global demand.

Given that commodity markets tend to overshoot on the way up and overcorrect on the way down, there is an additional downside to prices over the immediate near term for most products. The recent sanctions on Russian metal and increased tariffs on Chinese imports will contribute to an increasingly bifurcated global market, with tighter supply conditions in Europe and the United States and oversupply in Asia as mainland China aggressively expands domestic production capacity

while also benefitting from diverted Russian tonnage. Given that global demand growth will largely be driven by Asia, shortages are unlikely, and nonferrous metal prices will continue to recalibrate lower to levels more reflective of current supply and demand conditions. We expect aluminum prices to go up whereas copper, nickel, and zinc prices will decrease in the third and fourth quarters this year.