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29 October 2019
Although the LME aluminium price remains within a descending wedge-like pattern on the charts, a floor is firming up above $1,700 per tonne and there is an emerging upside bias, which will be reinforced if it can break above the downtrend line off the October high. A more positive macro backdrop arising from a possible US-China trade deal could kick-start the depressingly low LME price, with overly short fund positioning providing plenty of potential ammunition for short-covering rallies.
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29 October 2019
The latest CFTC and LME Commitment of Traders Reports (COTRs) have begun to show more consistent improvements in speculative positioning across the base metals in recent weeks.
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29 October 2019
Copper has rebounded by roughly 3% since the start of the fourth quarter, primarily driven by improving US-China trade relations and dollar weakness, although it is flat on the year. In the current regime, copper is only marginally influenced by its fundamental dynamics although we believe that a regime shift is likely to occur at some point next year, because the tight fundamental backdrop cannot be overlooked for too long. The risk/reward ratio for copper is therefore skewed to the upside.
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29 October 2019
Demand indicators for the base metals market
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29 October 2019
Downloadable data for week October 29 2019
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29 October 2019
Stronger lead prices are moving higher hand-in-hand with a market that is in a deepening supply deficit due to producer disruptions and seasonal demand. The steadiness of the rally suggests it is robust and sentiment is bullish, but prices may be getting overbought now. So while we like lead’s set-up, prices may need to consolidate, or undergo a correction, before too long.
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29 October 2019
The base metals have been getting some lift lately as optimism grows about a potential US-China trade agreement. Market discussion during LME Week this week may add some volatility to pricing, but may also help to create a consensus view that sets a directional trend for the remainder of Q4.
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29 October 2019
Nickel’s somewhat indifferent reaction to the surprising early start of Indonesia’s ore export ban this week, and the rejection of the attempt to reclaim $17,000 per tonne, was ominous. It was a missed opportunity by bulls, confirming that bears are in firm control. So long as nickel trades within the downward flag channel, we envisage the short-term series of lower highs and lows to continue.
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29 October 2019
Aluminium, copper, tin and zinc are all (to varying degrees) working higher. Nickel, which has already had its big rally for the year, is working lower. And lead’s long rally off its May lows is showing signs of peaking.
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29 October 2019
Despite the stability in refined tin market conditions since the start of Q4, we expect a renewed drawdown of exchange inventories and tighter forward spreads in the remainder of the year, driven by the implementation of refined production cuts in Asia and a likely recovery in refined tin demand conditions. We therefore expect the rebound in tin prices from late August to continue in the months ahead, even though we have revised lower our 2019 deficit due to weaker demand projections
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29 October 2019
Zinc prices continue to carry positive momentum for now, supported by the modest uptick in broader risk sentiment. But they are approaching important technical resistance in the $2,545-2,575 per tonne band and we are mindful that they are starting to look overbought. Also, with Chinese production so strong in September (up 18.9% year-on-year) and the ILZSG publishing a forecast this week for a surplus in 2020, zinc market participants could develop a ‘sell-the-rally’ mind set after such a strong run-up.