Industrial metals such as iron, aluminum, and copper are essential to regular technology and infrastructure. President Trump’s promise to go on an infrastructure binge naturally gave a boost to the price of industrial metals. Growth in U.S. GDP and continued improvement in end-use sectors like automotive, aerospace, construction and packaging also bode well for metals.

In fact, in the third quarter of 2017, base metals (copper, lead, nickel, zinc) were the best-performing commodities sector, recording a 10.74% gain. At the end of the quarter, the prices had gained around 16% since the onset of the year. This was mainly driven by aggressive buying of metals and other raw materials in China during the quarter.

The Chinese economy has lately been showing signs of improvement. China is widely expected to stimulate growth with further construction and infrastructure building projects. Prices have also gained on China’s drive to clean up its environment and improve infrastructure.

Also, the U.S.-North Korea imbroglio may have pushed China to add on its strategic stockpiles of commodities. Tight supplies also aided in boosting prices, with zinc, aluminum, and copper boasting the biggest gains. Industrial metals are sensitive to Chinese GDP growth, inflation, and the U.S. dollar — all of which were tailwinds to the industrial metals in the quarter.

Let’s take a closer look at the recent price movement of a few important metals and what lies ahead.

Iron

Iron, the main ingredient in steel moved in the opposite direction of the non-ferrous metals, dipping 0.32% in the third quarter and 22.79% so far in 2017.

The decline in iron ore prices was due to expectations of a fall in China’s steel demand as authorities tighten credit conditions. As steel capacity cuts planned for Chinese mills in winter months are approaching, the prospects of iron ore demand is looking bleaker. To curb pollution, the government has mandated steelmakers to cut as much as 50% of production. China consumes more than two-thirds of the seaborne iron ore market and produces as much steel as the rest of the world combined.

In September, imports of high-quality iron ore fines and lump ore from Australia, Brazil, and South Africa crossed 100 million tons, a record high. The scene reversed in October with a 23% plunge to 79.5 million tons. The record import caused domestic inventories to swell while requirements from Chinese steelmakers dwindled given regulatory restrictions.

The second reason for weakness in the iron ore market is seasonal as China’s imports of iron ore tend to move to their lowest level in October because of a National Holiday and weather issues that impact construction during winter months.