Forecasts and market analysis based on price assessments from Fastmarkets MB and Fastmarkets AMM

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Base Metals

16 October 2018 Issue

  • Metals generally firmer this morning despite weakness in other markets

    19 October 2018

    The base metals are mostly slightly firmer this morning. But in this climate of uncertainty, consumers and would-be buyers may not feel in any hurry to chase the market higher, so we expect more sideways trading. However, should equity markets correct lower that could add further downward pressure on the metals.

  • Aluminium: Testing $2,000 per tonne

    16 October 2018

    Although the aluminium market’s own fundamental dynamics are bullish, negative external forces are keeping prices fairly muted, and that in turn is helping to make the technical configuration appear somewhat fragile. There is a lingering threat that prices may break below the psychological price level at $2,000 per tonne. Fresh buying needs to emerge soon to keep prices buoyed. We have lowered our Q4 base case cash price forecast this week, but only by $50 to $2,050 per tonne.

  • Base metals investment analysis: Less bearish, but not more bullish yet

    16 October 2018

    Spec length basis CFTC data for Comex copper has swung to net long from net short over the past month, but that has been exclusively due to shorts covering, not longs accumulating. So while we can say that specs have become less bearish, it is hard to conclude yet that they are becoming more bullish. That might come as the fundamentals continue to tighten, but macro concerns probably need to subside too.

  • Copper: Deeper deficits for 2018-19

    16 October 2018

    While the overall mood during LME Week seemed to us slightly less optimistic than last year, participants confirmed our view that the global copper market has tightened up significantly in recent months. Together with strong import data for September, this has given us confidence to raise our 2018 and 2019 Chinese demand forecasts. All else equal, these revisions now produce deeper global supply deficits both years, and provide stronger fundamental support for our bullish price forecasts, which remain unchanged this week.

  • Demand Indicators: October 16 2018

    16 October 2018

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data October 16 2018

    16 October 2018

    Downloadable data for week October 16 2018

  • Lead: Pushing higher as tightness reappears

    16 October 2018

    The lead market started to strengthen late last week and that has continued this week, with prices once again popping above the $2,100 per tonne level. Coming after setting a low of $1,876 per tonne on October 11, this is a fast rebound and tighter nearby spreads suggests short-covering played a part. While this rally may run on in the short term, it was a very weak first half to October and we have revised lower our Q4 price forecast as a result.

  • Market Summary: Cautiously bullish

    16 October 2018

    There were some cautiously bullish undertones at LME Week, particularly related to the tight supply-side fundamental dynamics in some of the base metal markets. But there was also concern over many other factors in play that cast a more troubling cloud over the outlook via the broader macro backdrop. Such factors include sanctions, trade disputes, rising interest rates, higher oil prices and the possibility of some corrections in financial markets. In this setting metals may struggle to realize their upside potential.

  • Nickel: Forecasts lowered

    16 October 2018

    We have decided to revise down our Q4 2018 nickel price forecasts given the lower starting point after a weak Q3 and the range of negative factors weighing on the short-term outlook. But this is a short-term soft patch in the ongoing long-term bull story.

  • Technical analysis: Mixed picture

    16 October 2018

    It is a mixed picture on the technical front for the base metals, with aluminium, nickel and tin directionless but trying to build support, and the others trying higher but struggling to erode resistance as they go.

  • Tin: More short-term upside potential

    16 October 2018

    Unsurprisingly, tin did not gain much attention during the LME Week. However, we think that tin should benefit from new technologies over the long term, which should make its fundamentals tighter than they presently are. While tin has been more driven by the macro backdrop this year, its solid fundamentals have helped ensure a degree of price resilience. From current levels, we favour the upside for prices in Q4, especially from a technical perspective.

  • Zinc: Prolonging structural tightness

    16 October 2018

    There was little zinc-specific news from LME Week, as the likes of aluminium, copper and nickel were the main focal points. However, we did pick up a general undertone that while zinc’s bull cycle is approaching its end, risks to prices in the short term are skewed to the upside. This is because the supply recovery continues to stutter, evidenced by various reports of ramp-up delays, low grades, mine sequencing issues and China’s environmental restrictions. This is prolonging structural tightness.