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February 2018 | Base Metals


Market Summary: Healthy price correction


Broad risk-off market sentiment and high prices have attracted profit-taking. After the strong run-ups since mid-December we consider this a healthy correction. There has been dip buying too, which suggests underlying sentiment across the base metals remains bullish, but there may be more volatility ahead with Chinese Lunar New Year holidays starting this week. The volatility does not change our fundamental view on outlooks for the base metals, but it does present trading opportunities.

Healthy price correction
Broad risk-off market sentiment and high prices have attracted profit-taking. After the strong run-ups since mid-December we consider this a healthy correction. There has been dip buying too, which suggests underlying sentiment across the base metals remains bullish, but there may be more volatility ahead with Chinese Lunar New Year holidays starting this week. The volatility does not change our fundamental view on outlooks for the base metals, but it does present trading opportunities.

Aluminium: Bearish short term

Total SHFE stocks are fast approaching 800,000 tonnes and inflows have not slowed despite the winter production cuts. These will soon expire in March, raising the prospect of the SHFE stock rise continuing or even accelerating. Given this risk, we are...

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