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Metals Price Formation: New sources of demand

London, 11 October 2010

New investment vehicles – and the attraction of the commodities sector more generally – has created a new market environment in which market equilibrium needs to be redefined. How are new sources of demand combining with supply constraints to maintain buoyant prices?

Investments in base metals futures by pension funds and others are yielding still higher prices. Markets are now influenced by both physical balance and the investment/short hedging (nearby) futures balance.

By Guy Isherwood

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