Strong Demand from China Supports Industrial Metals Prices

While the global growth picture has been positive, economies in transition such as China and India are generating strong demand for industrial metals. China is short of key raw materials such as iron ore, zinc and nickel, all needed for the production of steel and steel products. While domestic production of these materials has increased, it has not been enough to supply the growth in demand. China’s import requirements of iron ore increased almost four fold to 325 million tonnes in 2006.

According to Gartmore’s China Opportunities Fund Manager Charlie Awdry, “we continue to believe that the markets are not optimistic enough on the continued tightness of the iron ore markets which will allow further price rises next year and record profit margins for producers”.

Gartmore Emerging Markets Funds have benefited from owning shares in the world’s largest iron ore from Brazil, Companhia Vale do Rio Doce (CVRD), whose quality assets continue to generate strong cash flows. The Funds also hold stakes in Korea Zinc, the company which leads the industry in smelting zinc and Norilsk Nickel. Both the Gartmore Emerging Markets Fund and the Gartmore SICAV Emerging Markets Fund have outperformed the benchmark MSCI Emerging Markets Index by more than 3% in the last year.