Base Metals Outperformed Commodity Index in 2017 - Chart Of The Day 4 January 2018 - Equitymaster
X

Sign up for Equitymaster's free daily newsletter, The 5 Minute WrapUp and get access to our latest Multibagger guide (2019 Edition) on picking money-making stocks.

This is an entirely free service. No payments are to be made.


Download Now Subscribe to our free daily e-letter, The 5 Minute WrapUp and get this complimentary report.
We hate spam as much as you do. Check out our Privacy Policy and Terms Of Use.

Helping You Build Wealth With Honest Research
Since 1996. Try Now

  • MyStocks

MEMBER'S LOGINX

     
Login Failure
   
     
   
     
 
 
 
(Please do not use this option on a public machine)
 
     
 
 
 
  Sign Up | Forgot Password?  

Base Metals Outperformed Commodity Index in 2017
Jan 4, 2018


2017 was the year of the rally. The BSE Sensex and the Nifty index were up 28% and 29% respectively. The mid-cap and small-cap indices outperformed the frontline indices.

Many investors talk about the stock market's gains in 2017, but another top-performing asset class was base metals, such as copper, zinc, nickel, and other industrial metals. Base metals were the leader in the commodity asset class and outperformed the broader commodity index in 2017.

From the data revealed in the chart above, base metals such as aluminium, copper, zinc, and lead went up by 20-30% compared to the Bloomberg commodity index of 2.4%. This rally was driven by increased economic activity, economic stimulus in China, and global supply disruptions.

However, the major reason for this rally was a decline in the US Dollar index by 8.6% in 2017. Typically, there is an inverse relationship between the value of the dollar and commodity prices. When the value of the dollar weakens against other major currencies, the prices of commodities generally move higher.

But what about 2018?

China supply-side reform holds the key to metals' outlook, and this will be the main focus for the market in 2018. For example, in 2017, China's supply reform policies supported the price rise in aluminium. However, going forward aluminium faces the rising risk of a supply response, both inside and outside China.

In the short term, however, restocking of steel, iron ore in the first quarter of 2018 could generate a typical seasonal rally. Beyond this, it is sustained demand, industrial production levels, particularly in China, and supply-side discipline that will determine the long-term outlook for metals.

Data Source: Business Standard

This Chart Of The Day was published in The 5 Minute WrapUp - Is it Wise to Ignore Bitcoins?

Equitymaster requests your view! Post a comment on "Base Metals Outperformed Commodity Index in 2017". Click here!

  

Our Most Popular Charts

Get the Indian Stock Market's
Most Profitable Ideas

How To Beat Sensex Guide 2019
Get our special report, How to Beat Sensex Nearly 3X Now!
We will never sell or rent your email id.
Please read our Terms

MARKET STATS