Base metal prices increased by 30 percent between August 2020 and February 2021. The resurgent industrial activity in China and other advanced economies, coupled with optimism about US fiscal stimulus, boosted sentiment toward metals. The prices of copper and iron ore, heavily used in the construction and manufacturing sectors, increased by 30 percent and 35 percent, respectively.
The strong demand for electric vehicles also pushed up prices of metals, such as cobalt and nickel, that are used in their batteries. Precious metal prices decreased by 6 percent after reaching highs in August 2020 as demand for safe assets faded. The IMF base metal price index is projected to increase by 32.1 percent in 2021 and decrease by 4.5 percent in 2022.
Uncertainty over the speed of the global economic recovery and potential production and trade disruptions due to the pandemic are the main risks to the forecast (Figure 1.SF.1, panel 4). Precious metal prices are expected to increase by 6.0 percent in 2021 and by 0.4 percent in 2022 because monetary policies are expected to continue to be accommodative.