So far, this year has not been a stellar one for the metals business and the LME. Prices have declined, and the LME has has shown its readiness to embark on a new, innovative policy of cancelling trades, seemingly for no reason other than that somebody either didn’t like the price or couldn’t (wouldn’t?) pay their margin calls. The business is not in a happy place, right now.
But think back, just a few short months. As 2021 and the worst of the Covid pandemic faded, the dawning 2022 looked so promising. A pick-up in demand, which had been flattened by the inactivity of the previous couple of years, looked a dead cert to give a substantial boost to metal prices, in tandem with a renewed thrust for electrification of the economy, notably transport. And indeed that’s how it started; copper hit $10000, and frankly looked good for $12000, or maybe more. Economic growth was returning, the world seemed to be settling back on to a more even keel.
It wasn’t to be like that, though, was it? The actions of little Vladimir have turned most of that benign prospect on its head. The prices that are going up are not really the ones suggestive of recovering economies – increasing fuel and food prices are precisely the ones we don’t want to see; they are the ones that choke economic – and social – growth.
And look at the political situation. The UK is probably near the top of the leaderboard in chaos, but there’s a chasing pack not far behind. Germany is discovering the underlying incompetence (rather than the erroneously-praised competence) of Angela Merkel’s time, as it struggles to live with a hugely disproportionate reliance on Russian gas; Macron hasn’t really got a majority to govern with; Italy is heading for a fairly hard-right government; and the US – well, it’s got Joe Biden.
When will it get better? We seem to be trapped in a malign cycle, and I suppose the hope there has to be that cycles eventually do come to an end, and turn to something else.
But right now, the LME’s blunder almost fades into insignificance. It’s not just the metals business which is not in a happy place. And to cap it all, the swimming pool engineers are still – at the beginning of August! – struggling to make mine work properly. Still, that’s a first world problem, I guess.
