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10 May 2019
While US-China trade talks continue, the market seems to be clinging on for an eleventh-hour deal this morning, Friday May 10, because key markets are holding up surprisingly well. But, if a deal does not miraculously emerge soon then further disappointment is likely to set in
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08 May 2019
Aluminium was already weighed down by bearish sentiment before the macro backdrop soured. To boot, this market has had to absorb large stock inflows and there may well be more to come. But speculative sentiment is already overstretched on the short side, so we think the negatives are largely priced in and the bigger risk to aluminium prices going forward is a rebound to the upside. Our Q2 base case forecast remains $1,860 per tonne for now.
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08 May 2019
The latest COT reports show that base metal speculators were already net short aluminium, copper, lead and nickel even before the sell-off of the past week. A US-China trade deal – if it ever materializes – is still likely to be a bullish trigger for short-covering and long position building.
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08 May 2019
The selling pressure in copper has intensified since the start of May, confirming our cautious near-term view. We think that investor sentiment toward copper could deteriorate further this month, especially in a context of renewed trade uncertainty between the US and China, leaving short-term risks to prices skewed to the downside. We are still modelling a 356,000-tonne global deficit over Q2-Q4, however, so prices could recover strongly in H2 once the fundamentals reassert themselves.
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08 May 2019
Demand indicators for the base metals market
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08 May 2019
Downloadable data for week May 8 2019.
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08 May 2019
Sentiment in the lead market remains weaker than we had expected given such a low level of exchange inventories and a destocked supply chain. We thought a US-China trade deal would give the auto market a boost, but sales are still lower year on year and if the trade war intensifies then the auto market may be hit harder and the suffering may go on for longer. Also there has yet to be any meaningful stimulus into China’s auto industry. Consistent with our low case forecast scenario, lead prices have slumped to levels not seen since 2016, but the lows are at least attracting some bargain hunting, which could turn into restocking/short-covering rallies if sentiment recovers.
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08 May 2019
The escalation in the US-China trade dispute at a time when markets were looking forward to a resolution has created nervousness again. And considering metal prices have for the most part been under pressure lately, this development could lead to further weakness in the short term until more clarity emerges.
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08 May 2019
Fastmarkets was the most accurate out of 21 nickel price forecasters in Q1 2019, based on our Apex survey that ranks the forecasting accuracy of commodity bank analysts and trading desks every quarter. We were on the bullish side of consensus – a bias that has served us well in nickel – and are again relatively bullish for Q2.
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08 May 2019
The base metals are under selling pressure with many technical support levels already broken and more vulnerable to the same fate in the short term.
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08 May 2019
Tin prices continue to decline since the start of May, which is in our view driven by weak demand conditions and expectations for stronger Indonesian supply. Given the still-elevated net long speculative positioning on the LME, we believe that tin prices are vulnerable to further downward pressure in the near term, thereby inducing us to revise lower our Q2 forecast.
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08 May 2019
Generally it has been an underwhelming reporting season by the zinc majors, with aggregate mine supply in Q1 expanding only 1.5% year on year, based on results published so far. That is a bullish outcome given expectations for a supply surge this year. But we note that there hasn’t been any guidance downgrades yet, and some 1.24 million tonnes of capacity added in 2018-19 is still in the process of ramping up.