According to the MSCI Industrial Metals Index, in the past year, the cost of both base and precious metal commodities has gone up by 21%. Procuring and trading metal is big business, especially if you are in the construction or manufacturing industries.
For commodities managers, there is the opportunity to make a considerable profit if you follow global trends. The metal commodities industry is driven by population growth, technological innovation and environmental regulations.
You should also consider that China, the leading county in manufacturing, drives demand, particularly for base metals. Keep your eye on the forecasts, follow the global trends, and you can improve your profits.
China is driving the industry
China is the biggest influencer in the metal commodities industry, and it is primarily their demand that drives business. They produce 404 metric tons of gold every year, almost a billion tons of steel, and 36 million tons of aluminum, producing almost everything from a threaded steel bar to utensils.
If you are in commodities management, then it is important to understand that China is driving up the costs, particularly of base metals used in construction and manufacturing. You may want to steer clear of metals that are heavily used in China to improve your own profits.
The second biggest driver in the metal commodities industry is technological innovation. Manufacturers are focusing heavily on new inventions that will transform into profits, including electric cars, automated excavation equipment, and X-ray diffraction.
As a metal commodities manager, focusing your business on metals that are extremely versatile in manufacturing can help raise profits. To keep production moving forward, TMS Titanium recommend procuring metal in blocks, bars or rods that are specific to the products being manufactured. Titanium, in particular, is heavily used in construction innovations, and will last a lifetime.
The mining industry is currently under a lot of scrutiny about the environmental footprint that it leaves behind. Mining practices can be particularly damaging and lead to land erosion and loss of biodiversity.
This has brought on the trend for technology to make the mining procedure less invasive, and also for the use of renewable energy in mining. Commodities traders should take advantage of these trends, and consider procuring and trading in “environmentally friendly” metals, and recycling such as with the use of scrap metal.
Metal Commodities Industry
The metal commodities industry is booming, driven by the demand for new technology. As a commodities manager, you can take advantage of this by following global trends.