Base Metals - Can 2017 Be A Repeat Of 2016?


  • 2016 was a bullish year with double-digit gains.
  • Copper and Aluminum prospects.
  • Lead and nickel volatility ahead.
  • Zinc and tin fundamentals still favor gains.
  • Infrastructure building in the U.S., China and India.

Base metals are the building blocks of infrastructure around the world. The bull market in commodity prices that began in 2004 took the price of copper on a wild ride first to all-time highs of $4.2160 in May 2008 and many other base metals including aluminum, nickel, lead, zinc, and tin went along for the ride. In the wake of the global financial crisis the red metal dropped like a stone to lows of $1.2475 in December 2008 but then spent the next three years rallying in dramatic fashion to a new all-time peak of $4.6495 in February 2011 with its other base metal cousins in tow.

The February 2011 highs turned out to the pinnacle for the metals which then fell sharply in the years that followed. In 2012 through 2014, the composite base metal sector moved appreciably lower. In 2015 it fell by 23.4% but in 2016, the sector experienced a reversal of fortune.

Base metals prices are often an excellent signal for the health of global economic conditions and the price action last year is telling us that the landscape looks a lot better than it has for quite some time.

2016 was a bullish year- Double digit gains

2016 was a bullish year for industrial commodities but it did not start that way. Early in the year, metals fell to multiyear lows but important bottoms formed in all of the markets. Base metals likely overextended downside losses, as volatile commodity prices tend to move past equilibrium levels. However, beginning in late February, the industrial commodities began to rebound.

The base metals sector of the commodities market posted a 26.77% year-on-year gain in 2016 led by zinc which was up 59.53%. Tin was the second best performer with a 44.1% increase in price while all other metals in the sector; copper, aluminum, nickel

This article was written by

Andrew Hecht profile picture
Weekly commodities commentary and calls, from a Wall Street veteran
Andy Hecht is a sought-after commodity and futures trader, an options expert and analyst. He is the #2 ranked author on Seeking Alpha in both the commodities and precious metals categories. He is also the author of the weekly Hecht Commodity Report on Marketplace - the most comprehensive, deep-dive commodities report available on Seeking Alpha.

Andy spent nearly 35 years on Wall Street, including two decades on the trading desk of Phillip Brothers, which became Salomon Brothers and ultimately part of Citigroup.

Over the past two decades, he has researched, structured and executed some of the largest trades ever made, involving massive quantities of precious metals and bulk commodities.

Andy understands the market in a way many traders can’t imagine. He’s booked vessels, armored cars, and trains to transport and store a broad range of commodities. And he’s worked directly with The United Nations and the legendary trading group Phibro.

Today, Andy remains in close contact with sources around the world and his network of traders.

“I have a vast Rolodex of information in my head… so many bull and bear markets. When something happens, I don’t have to think. I just react. History does tend to repeat itself over and over.”

His friends and mentors include highly regarded energy and precious metals traders, supply line specialists and international shipping companies that give him vast insight into the market.

Andy’s writing and analysis are on many market-based websites including CQG. Andy lectures at colleges and Universities. He also contributes to Traders Magazine. He consults for companies involved in producing and consuming commodities. Andy’s first book How to Make Money with Commodities, published by McGraw-Hill was released in 2013 and has received excellent reviews. Andy held a Series 3 and Series 30 license from the National Futures Association and a collaborator and strategist with hedge funds. Andy is the commodity expert for the website and blogs on his own site He is a frequent contributor on Stock News-

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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