Global trends

COVID-related restrictions

In 2022, following the easing of pandemic-induced restrictions, supply chains affected by lockdowns started to recover. China, the largest consumer of base metals and a key producer and consumer of base and precious metals, bucked the trend, as the country, with its zero-COVID policy, kept stringent restrictions in place across major cities, slashing industrial demand for metals across a wide range of applications, from stainless steel to the automotive and jewellery industries. Meanwhile, despite the lockdowns that were in place throughout the year, China managed to boost both its production and consumption of nickel and copper products. The lifting of restrictions in late 2022 is expected to spur business activity and demand for metals in China starting from the second quarter of 2023.

Stricter monetary policy

The year 2022 saw a substantial rise in global inflation caused by geopolitical tensions, surging energy prices, ongoing COVID-19 restrictions in China and supply chain disruptions. In response to accelerating inflation, major central banks decided to tighten their monetary policies, dampening global economic growth and, consequently, negatively impacting industrial consumption of base and precious metals. The US dollar appreciation against major currencies caused by the Federal Reserve System’s (the Fed) rate hikes resulted in a retracement of commodity prices in the second half of 2022.

Geopolitical tensions

The tensions in Ukraine in 2022 led to unprecedented sanctions against Russia. They were exacerbated by what became known as “self-sanctioning” as some international organisations shuttered their Russian operations despite the absence of any legal restrictions on working with Russian companies, which affected both inventory procurement and sales for Russian producers.

The London Bullion Market Association (LMBA) and the London Platinum and Palladium Market (LPPM) have introduced restrictions on Russian refineries and on the processing of Russian-origin precious metals in other countries. This move has affected the liquidity of Russian metals in the global market. The London Metal Exchange also considered delisting Russian base metal brands but decided against the ban following consultations with market players.