Definition
Base Metals
Base metals are common industrial metals like copper, aluminium, zinc, lead and nickel, whose prices reflect global manufacturing and construction demand.
Base metals trade on the London Metal Exchange globally and on the MCX in India, where copper, aluminium, zinc, lead and nickel futures are listed. Their prices are barometers of industrial activity, especially Chinese demand.
Copper is nicknamed 'Dr Copper' for its knack of signalling economic health. Indian manufacturers and traders use MCX base-metal futures to hedge raw-material costs, and prices track global benchmarks adjusted for the rupee and duties.
Related terms
- MCX (Multi Commodity Exchange)MCX is India's largest commodity derivatives exchange, where futures and options on metals, energy and bullion like gold, silver and crude oil are traded.
- London Metal Exchange (LME)The London Metal Exchange is the world's main venue for trading industrial base metals, setting global benchmark prices for copper, aluminium, zinc and more.
- Commodity SupercycleA commodity supercycle is a prolonged, multi-year period of broadly rising commodity prices driven by sustained demand outpacing supply, often tied to major industrialisation.
- Commodity HedgingCommodity hedging uses futures or options to lock in input or output prices, protecting producers and consumers from adverse moves in commodity prices.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.