A Real-Time Framework for Forecasting Metal Prices

Andrea Bastianin, Luca Rossini and Lorenzo Tonni
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Andrea Bastianin: Department of Economics, Management, and Quantitative Methods, University of Milan and Fondazione Eni Enrico Mattei
Luca Rossini: Department of Economics, Management, and Quantitative Methods, University of Milan and Fondazione Eni Enrico Mattei
Lorenzo Tonni: Department of Economics, Management, and Quantitative Methods, University of Milan

No 2025.34, Working Papers from Fondazione Eni Enrico Mattei

Abstract: This paper develops a real-time forecasting framework for monthly real prices of four key industrial metals – aluminum, copper, nickel, and zinc – whose demand is rising due to their widespread use in manufacturing and low-carbon technologies. To replicate the information set available to forecasters in real time, we construct a new dataset combining daily financial variables with first-release macroeconomic indicators and use nowcasting techniques to address publication lags. Within this real-time environment, we evaluate the predictive accuracy of a broad set of univariate, multivariate, and factor-augmented models, comparing their performance with two industry benchmarks: survey expectations and futures-spot spread models. Results show that although short-run metal price movements remain difficult to predict, medium-term horizons display substantial forecastability. Indicators of manufacturing activity tied to primary metals — such as new orders and capacity utilization — significantly improve forecasting accuracy for aluminum and copper, with more moderate gains for zinc and limited improvements for nickel. Futures and survey forecasts generally underperform the real-time econometric models. These findings highlight the value of incorporating timely macroeconomic information into forecasting frameworks for industrial metal markets.

Keywords: First-Release Data; Energy Transition; Forecasting; Metals; Critical Raw materials (search for similar items in EconPapers)
JEL-codes: C32 Q02 Q41 Q43 Q48 (search for similar items in EconPapers)
Date: 2025-12
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