Recession Fears Sap Commodity Prices

Time to Invest in Mining Stocks? | Also on KiplingerAlso on Kiplinger | Created for {EMAIL} | [Web Version]( June 24, 2022 CONNECT WITH KIPLINGER  [LinkedIn]( [Facebook]( [Twitter]( [Instagram ]( [Youtube]( [SIGN UP]( ⋅ [WEBSITE]( [] What's in the Works [] [Recession Fears Sap Commodity Prices]( Metals prices are falling because of recession fears in both the U.S. and Europe, and because of slowing growth in China. Copper has been the most affected, but steel, aluminum and nickel, among others, have been hurt, as well. The Russian invasion of Ukraine had boosted metals prices, as well as energy, on the fear of shortages. Russia is a major producer of nickel and copper, for instance. Those price increases helped drive the overall surge in inflation that has plagued the economy in recent months. But the signs of a slowing economy, and speculation about a recession next year, have caused metals prices to drop as companies that had hoarded supplies in anticipation of shortages may not only stop hoarding, but may even release some of their holdings, causing prices to decline further. Prices could rebound a bit if China’s growth picks up now that its spring COVID-19 lockdowns are over, but the slowdowns in the U.S. and European economies may limit China’s impact for a while because of slowing Chinese exports. [You Could Earn 70K Miles With This Astonishing Travel Card]( With this card you'll not only have access to powerful travel rewards, but also flexibility with extended periods of 0% intro APR and no annual fee. [READ MORE]( ADVERTISEMENT: [] Latest [] A recovery for miners’ stocks? Give it a minute. Recessionary fears have been weighing on various areas of the market of late, and that includes a sharp turn lower for the metals and mining space. The SPDR S&P Metals and Mining ETF ([XME](), up 47% through mid-April, has lost a third of its value since then. Morgan Stanley Research Analyst Carlos De Alba says in a Friday note that while still-weakening global growth could weigh on mining stocks a little longer, he sees a pair of tailwinds emerging once current macroeconomic risks recede: “1) Stronger secular demand for metals, driven by global electrification trends, and 2) Increasingly challenging conditions to develop new supply.” De Alba bucks the consensus view, however, saying that aluminum names offer more upside to his price targets than copper equities. Right now, he favors Alcoa ([AA]() – which he has at Equal Weight (Hold) and a $55 price target – over Freeport-McMoRan ([FCX](, Equal Weight, $30 price target) and Southern Copper ([SCCO](, Under Weight, $52). He also has downgraded Canadian mining company Teck Resources ([TECK]() to Equal Weight with a $45 price target, believing that the “prospects of decreasing metallurgical coal prices will weigh on the stock's performance going forward.” [It's Time to Rethink Your Media Diet]( Traditional business news is littered with jargon and filled with fluff. For unbiased business news worth reading, check out The Daily Upside. Every weekday, [The Daily Upside]( newsletter delivers timely insights and stories you won't find elsewhere. Plus,[it's free to sign up here.]( [READ MORE]( ADVERTISEMENT [] Also on Kiplinger [] [Also on Kiplinger]( - [Best Banks for Higher-Net-Worth Clients]( - [Should You Prefer Preferred Stocks?]( - [Getting Married? Let's Talk Taxes]( - [7 Standout Places to Retire]( - [Sign Up Free for Kiplinger Today -- Timely Tips to Make and Keep More of Your Money Every Day]( ABOUT KIPLINGER When we write about money, we get it right. 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