Economic Projections and Metal Prices

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I caught this Conference Board post which discusses revised US economic growth projections. It’s extremely relevant. Personally, I find a lot of the Wall Street-analyst-type reports a bit more optimistic in terms of calling the troughs within various metals categories and describing longer term projections. I base my opinion on the fact that few of the reports actually cite any long term economic projections. That’s why we tend to report on broader economic indexes like the one from the Institute of Supply Management. So what does the latest analysis say?

First, the Conference Board announced that the third quarter contracted, marking the first quarter the US economy could officially be considered “in recession.” Second, the housing market may not turn positive until the second half of 2009. Third, the economic forecast for the fourth quarter of this year calls for a 1.1 percent contraction. First quarter 2009 will see a .7 percent contraction and the second quarter of 2009 will see a .3% contraction. Unemployment could also rise to 7.0 percent, based on the forecast. Finally, US exports may also drop according to the forecast. Not the rosiest of pictures to be sure.

The rate in which metals producers curb production to meet lower anticipated demand will also affect metals prices. Steel and aluminum producers are already busy looking at production cuts as we have previously reported here and here and here. Now might be a great time to review your long term hedging strategies and/or buy on the spot market!

–Lisa Reisman

Comment (1)

  1. Nate says:

    The client at my FT-work engagement was thinking about what industries are resilient in these financially-tense times. He mentioned alcohol, tobacco, soap. I thought of metals, more than iron and zinc in one’s diet. I see construction cranes and materials accenting the skyline, neighborhoods and streets. There’s no dramatic dip in traffic to Room and Board and DWR stores for the desire of metal-inspired furniture. Looking into the worlds of architecture and industrial design for positive gleanings about metals may be superficial, ignoring underlying factors and patterns of density, but they remain visible indicators of the big metals picture, outside in.

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