NEW YORK ( TheStreet) -- As developing nations continue to prosper, grow and decouple from the Western world, the demand for certain alloying metals is likely to surge and drive up their prices.
There is a direct correlation with the demand for alloying metals and economic growth. In general, as economies grow, they consume and, hence, demand more alloying metals. Some of these metals, like aluminum, iron and copper are invaluable for building a modern economy due to their roles in the construction of key infrastructure.
Additionally, these metals are vital to the development and expansion of a nation's manufacturing sector. This was seen in 2009 as China's economy and manufacturing sector grew, forcing increased consumption and demand of copper, which further resulted in higher copper prices.
As for the coming year, developing nations are expected to be at the forefront of economic growth and will likely be the drivers of increased demand for these metals. Copper has positive fundamentals and is likely to see a market imbalance on the supply and demand side, resulting in a deficit in the metal, pushing prices up.Aluminum is likely to see price support due to the general buoyancy expected in the base metal sector as well as improving demand. As for iron ore, prices are likely to increase due basic supply and demand forces. Demand is likely to increase in both developing and developed nations, and supply is expected to remain relatively stable. Rio Tinto (RTP), Vale (VALE - Get Report) and BHP Billiton (BHP) are the world's largest producers and suppliers of iron ore and are likely to benefit from these trends.