Investors are piling into wagers on industrial metals like copper and nickel, betting that coronavirus vaccines and stimulus programs will drive a boom in manufacturing activity as part of a global economic resurgence.
Prices for copper have risen to their highest level in almost eight years. Iron ore, the main ingredient of steel, is one of the best-performing assets in 2020. Other raw materials, such as aluminum and zinc, have added roughly 15% since the end of September and 40% or more since mid-May. And shares of metals producers, including Freeport-McMoRan Inc. and Century Aluminum Co. , are on a tear, climbing alongside other stocks closely tied to economic growth.
Industrial metals are the building blocks of construction, key to making everything from houses to electric cars. Their prices are particularly sensitive to manufacturing activity in China because the country accounts for roughly half of global demand for copper and other materials. The faster-than-expected recovery there has sparked a reversal in prices, which had languished in recent years due to trade tensions between the U.S. and China, even before pandemic lockdowns dented demand.
