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24 September 2019
We have seen short-covering rallies in aluminium, most recently during the first half of September, but underlying bearish themes – ongoing macro/trade/geopolitical uncertainties, a poor demand outlook and the risk of rising global supply – tend to reassert themselves to ensure prices do not escape the descending wedge-like pattern that continues to constrain trading. Once again, we find ourselves warning of more downside potential and a risk that a new 2019 low could still emerge.
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24 September 2019
Speculators trading Comex copper continue to gradually unwind the large gross short position built in Q2/Q3. Further short covering could push up copper prices much further in Q4. Other base metals with similarly elevated short positioning could follow suit.
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24 September 2019
While copper has been depressed by deteriorating macro sentiment caused by trade uncertainty in recent months, we still believe that its fundamentals are set to tighten in the final months of the year, driven by (1) tighter refined output growth amid tightness in the concentrate market and (2) firmer real demand, especially in China thanks to stronger consumption from the power sector. Given still-overlying bearish speculative positioning, this leaves copper vulnerable to more short-covering rallies.
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24 September 2019
Demand indicators for the base metals market
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24 September 2019
Downloadable data for week September 24 2019
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24 September 2019
Pressure is building up around the $2,100 per tonne level on three-month lead prices and that bodes well for another rally. Falling LME and SHFE lead stocks, combined with ongoing reports by ILZSG of a supply deficit would support a price rally. That said, weak flash manufacturing purchasing managers’ index data for September in Europe, suggests the economic headwinds are only getting stronger.
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24 September 2019
Base metal prices continue to oscillate to the tune of news flow relating trade war negotiations, economic indicators and geopolitical events. Until there is more clarity and less risk, particularly with regard to US-China trade negotiations, trends are unlikely to change meaningfully. High level talks get under way again in October.
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24 September 2019
The quarter-to-date LME average cash price is $15,353 per tonne, which puts nickel on course to beat our upwardly revised base case Q3 forecast of $15,005 per tonne. The reversal from the early September peak is proving slower and more orderly that we had expected. It still resembles consolidation more than a correction and this in theory leaves the door open for a potential fourth up-leg to the Indonesia-related rally that began in July.
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24 September 2019
The base metals tried higher earlier in September, but that momentum seems to have faded and prices are rolling over to the downside again.
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24 September 2019
Tin prices have become relatively more resilient in the face of the recent risk-off episode caused by increased geopolitical tensions in the Middle East. While LME tin remains the worst-performing base metal so far this year, we believe that it will enter a catch-up phase in the final quarter due to positive fundamental forces particularly on the supply side.
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24 September 2019
LME zinc has benefitted from short-covering in recent days. On the surface, zinc bears appear more cautious, potentially as visible stocks continue to trend lower, and ahead of high-level US-China trade talks due to take place in early October. Despite this, zinc prices are likely to struggle to make significant gains as the prospect of recovering global supply and a less robust demand outlook create a bearish overhang.