The metals markets have come alive of late. And while the sector's future is often difficult to predict, I'm inclined to believe that there's money to be made in them there mines and mills.
Take copper, for instance. After falling off a proverbial cliff from roughly $4.00 a pound to well under $1.50 in the second half of last year, the price has moved slowly but steadily upward, based largely on demand from China.
Chinese demand is typically seasonal, normally declining precipitously after April. But this year has been different. Chinese copper demand held in nicely through May, a key factor in the continuation of those slow price increases, which now have reached the low $2.30s.
The results have been beneficial to the likes of Freeport-McMoRan
Other metals are participating in the surge as well. Aluminum, for instance, has moved up 11% thus far in June, reaching a five-month high -- a big reason for the near-double in Alcoa's
And then there's the Asian turmoil in steel. China is by far the largest importer of iron ore -- a key component in steelmaking -- and Brazil's Vale
A couple of weeks ago, amid sliding global steel production, Rio reached an agreement with Japan's Nippon Steel for a 33% drop in iron ore prices. Other steelmakers have joined Nippon, but the Chinese manufacturers still are holding out for at least a 40% discount from last year's price. The results will indeed be fun to follow.
So the action definitely isn't slowing in the minerals and metals markets. Given recent history and share price changes, I'm inclined to suggest that Fools watch this sector closely, perhaps keeping an especially close eye on Freeport, which I think clearly has room to run, and Alcoa, which appears to be just getting started.
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