Research

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

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Base Metals

29 January 2019 Issue

  • Metals start the new week well placed to extend higher

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    04 February 2019

    Base metals started the week mixed this morning, with the dollar firmer after being softer last week. The metals are also still digesting the disappointing Chinese PMI data last week, but the impact of this is being countered by reports that progress is being made in the US-China trade talks.

  • Metals prices consolidate while poor Chinese PMI data weighs on sentiment

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    01 February 2019

    Further weakness in China’s Caixin manufacturing PMI, which fell to 48.3 in January from 49.7 in December, was enough to dent confidence in the base metals market this morning. Prices were mostly weaker as a result.

  • Forecasting accuracy scorecard for 2018

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    31 January 2019

    For an unprecedented fifth year in a row, Fastmarkets MB Research was one of the most accurate base metal price forecasters, according the latest Apex annual survey. We took third place with an overall average accuracy of 96.8%.

  • Price rallies gain momentum

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    31 January 2019

    A dovish US Federal Reserve stance, a weaker dollar and a firmer Chinese yuan are all helping to underpin base metals prices this morning after another strong showing yesterday.

  • Metals looking brighter again this morning ahead of US-China trade talks

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    30 January 2019

    The base metals are mostly part still on the front foot this morning after an up-day yesterday. They are looking well placed to extend higher. Much will no doubt depend on how US-China trade talks progress this week. As such, we should be braced for some volatile trading, especially as liquidity is likely to start to shrink ahead of the Chinese Lunar New Year holiday (February 4-10). Any real progress on trade could give the market a significant boost because we think industry has been running with low stocks.

  • Aluminium: Looking for fresh direction

    29 January 2019

    The LME aluminium price has been in an upward trend since the January 3 low, which is a positive development from a technical perspective at least. The increase in LME cancelled warrants recently has helped somewhat, but the removal of Rusal’s sanctions adds downward pressure even though it was already widely expected. US-China trade talks are the most likely source of fresh direction in the short term. Our Q1 price forecast remains at $1,900 per tonne, allowing for a little further upside if broad risk appetite continues its gradual improvement.

  • Base metals investment analysis: Investors may not be much friendlier towards base metals until H2

    29 January 2019

    Macro fund investors may still favour other asset classes over industrial commodities like base metals for much of H1 2019 until the effects of China’s moderate reflation measures start to come through in H2.

  • Copper: Short covering

    29 January 2019

    Copper prices experienced a strong rally on Friday, confirming our view that speculative positioning had become overly bearish. We see more short-covering rallies ahead on further gradual improvements in macro sentiment and renewed buying in Q2 when physical demand picks up and the fundamentals tighten at a faster pace. In this week’s analysis, we focus on China’s refined copper demand by reviewing the main downstream copper sectors.

  • Demand Indicators: January 30 2019

    29 January 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data January 30 2019

    29 January 2019

    Downloadable data for week January 30 2019

  • Lead: Springs to life

    29 January 2019

    We said last week that lead’s recent narrow sideways trading range reminded us of a coiled spring, in the sense that prices had the potential to go higher, but were being held back. The break to the upside we warned of has since unfolded, with a rally above $2,100 per tonne. This is in line with continuing signs of fundamental strength with data showing an ongoing supply deficit. Falling LME stocks, tighter spreads and strong price action are all justified by the tightening fundamentals. Going forward, the key will be whether the market is confident enough to follow the data.

  • Market Summary: Bias to the upside

    29 January 2019

    The base metals are still edging higher, but a lack of progress in the latest round of US-China trade talks this week may scupper the fragile improvement in sentiment.

  • Nickel: Rallying again

    29 January 2019

    After pausing to consolidate last week, we are not surprised that nickel has now resumed its uptrend. It has moved on to $12,160 per tonne – matching the highs last seen in early November. It is too early to say whether Vale’s nickel business will be affected by the fallout from the latest tailings dam disaster at another of the company’s Brazilian iron ore mines.

  • Technical analysis: Uptrends continuing

    29 January 2019

    Technical configurations for the base metals mostly look positive at the moment, though resistance levels will need to be overcome to maintain the uptrends.

  • Tin: Shaken by large stock movements

    29 January 2019

    Tin underperformed the rest of the base metals complex last week after a significant surge in LME inventories, tempering the market’s recent bullishness. While we think that the upside potential for tin prices in Q1 has been mostly achieved, we expect the underlying choppy rising trend to prevail, reflecting a tight fundamental backdrop amid supply tightness from Indonesia. The large swings in exchange inventories since the start of the year are, in our view, partly speculatively-driven and therefore do not reflect an accurate picture of fundamental dynamics.

  • Zinc: Testing important resistance

    29 January 2019

    Fresh cancellations, limited LME stock inflows, the low absolute level of visible inventories, a weak dollar and improving macro sentiment all remain supportive factors for zinc. But after a decent rally last week, prices have run into important technical resistance. While positive progress in US-China trade talks this week could be the catalyst for an upside break, further significant gains are likely to be limited by the looming supply surge and by a ‘sell-the-rallies’ mentality that may not have been shaken yet