Research

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

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Base Metals

5 February 2019 Issue

  • Metals prices pull back as Chinese participants return after Lunar New Year holiday

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    11 February 2019

    China’s return to the market after a week-long break for Lunar New Year has not brought with it a rush to restock and that has led to some disappointed selling across the LME base metals this morning.

  • Aluminium: In line with our forecast

    05 February 2019

    LME aluminium cash prices averaged $1,846 per tonne in January as they edged away from their lows at the start of the year. The firmer tone has continued into February, which keeps the market in line with our Q1 average base-case forecast of $1,900 per tonne.

  • Base metals investment analysis: How long might fund short-covering continue?

    05 February 2019

    We had not expected funds trading the base metals to get too bullish too soon this year because of the macro risks still overhanging the outlook. So the January-February activity that appears quite positive may be more of an adjustment excessively bearish positioning in December. Once adjusted, fund managers may sit on the side lines for a while waiting for the outlook to be de-risked before taking a more bullish stance.

  • Copper: Rebound set to continue

    05 February 2019

    Copper has strengthened slightly alongside the rest of the base metals complex since the start of the year, driven by a modest improvement in macro sentiment. This comes after a sell-off of 19% last year, which was primarily owing to macro tensions, namely the US-China trade tiff and the Fed’s tightening. Copper’s tight fundamental backdrop was not sufficient to offset the selling pressure stemming from negative macro flows, but we maintain the view that prices will appreciate over the course of this year, re-aligning with their robust fundamentals.

  • Demand Indicators: February 5 2019

    05 February 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data February 5 2019

    05 February 2019

    Downloadable data for week February 5 2019

  • Lead: Base in place, higher prices coming

    05 February 2019

    Three-month LME lead prices have reached a high of $2,135.50 per tonne, up 13.8% since the October low at $1,876 per tonne. The recent performance now suggests a large base is in place, and this is expected to support higher prices, which in turn would then reflect the tighter fundamentals more accurately.

  • Market Summary: Price gains amid holiday-thinned liquidity may not hold

    05 February 2019

    Base metals continue to rally strongly. It was always our view that they had overshot on the downside in late 2018 and would recover this year, albeit more cautiously at first, we thought. So our base case forecasts erred on the bullish side, even for Q1. But as things stand now, we may not have been bullish enough and our high-case forecast scenarios may need to replace our base case scenarios. However, the rallies this week are coming amid conditions of relatively low liquidity because of the Lunar New Year holidays. It will be interesting to see what next week brings when Asian traders return to their desks.

  • Nickel: Too much, too soon?

    05 February 2019

    Nickel prices burst into the $13,000s this week, 25% above the early-January lows. Reduced liquidity due to Lunar New Year holidays is likely to have played a part, technically prices are overbought now and there may be some speculative excess in the price amid concerns that Vale’s tailings dam disaster last month could impact the company’s nickel production plans. So there could be more volatility to come and we will not rush to upgrade our price forecasts just yet.

  • Technical analysis: Getting overbought

    05 February 2019

    After a strong run-up in recent days extended the January’s gains, many base metals have started to look technically overbought and would benefit from a period of consolidation.

  • Tin: Buy the dips

    05 February 2019

    Tin has strengthened nearly 7% since the start of the year, outperforming the LMEX. Although tin demand is seasonally weak at this time of the year, market participants have discounted the increasing supply tightness, pushing prices higher. We expect more price volatility in the near term and a further appreciation over the course of 2019 on a deepening deficit in the refined tin market.

  • Zinc: Q4 2018 producer results in focus

    05 February 2019

    Judging by the rally in prices and the rise in open interest last week, zinc bulls have been emboldened by a series of positive macro and micro factors lately. These include optimism for further progress in the US-China trade talks, falling availability of exchange stocks, talk of Chinese infrastructure spending boosting demand and a smelter bottleneck restraining supply, plus a dovish Fed putting the dollar under pressure. Against this backdrop, there may be further risks to the upside for prices in the short term. But recent guidance by major zinc producers reinforces our view that prices are likely to soften in H2 2019 as rising supply leads the fundamentals to rebalance.