Aluminium vs. Copper: Which Metal Will Reign Supreme in the Market? - Morgan Stanley Analysis
In recent times, aluminium prices have surged ahead of copper, but Morgan Stanley analysts predict a potential shift in favor of copper in the near future. While aluminium prices have seen an 11% jump due to rising input costs, strong demand from key sectors in China, and supply disruptions, copper is believed to be better positioned for growth.
The surge in aluminium prices is attributed to the increase in alumina costs, a key ingredient in aluminium production. This cost increase has been passed on to consumers, along with strong demand from sectors like solar energy, grid infrastructure, and electric vehicles in China. On the other hand, copper has faced pressure due to global growth concerns, but signs of improvement suggest a potential price rally.
Analysts see positive indicators for copper, such as increasing demand in China and declining inventories, pointing towards a strengthening market for the metal. While both aluminium and copper are expected to perform well in the fourth quarter of 2024, copper is seen as having a stronger potential for outperformance due to its recent underperformance and improving market dynamics.
However, it is important to note that a deteriorating global economy could have a more significant negative impact on copper compared to aluminium, as copper is more sensitive to economic fluctuations. Investors should keep a close eye on these market trends to make informed decisions about their investments.