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

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Base Metals

12 February 2019 Issue

  • Most metals still consolidating, copper challenging resistance again

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    19 February 2019

    The LME base metals were mixed, but little changed this morning as consolidation remains the overall theme. The exceptions are tin, which is clearly in a strong uptrend, and copper, which is rebounding to once again challenge resistance.

  • Aluminium: Starting to underperform

    12 February 2019

    Although macro sentiment has improved somewhat over the past month, concerns surrounding slowing demand and rising supply are weighing on overall aluminium price sentiment, and the chart set-up suggests short-term risks are shifting to the downside. With this outlook and an average for the current quarter to date of $1,851 per tonne, aluminium prices are underperforming our expectations; our base case Q1 2019 cash price forecast is $1,900 per tonne and our low-case scenario is for an average of $1,880 per tonne.

  • Base metals investment analysis: Plenty of fund short-covering, but where are the longs?

    12 February 2019

    LME COT data has been showing that rising prices this year have mostly been driven by short covering – bears becoming less bearish. In order for price gains to be sustainable, we would want to see fund long-position building taking over from short-covering as the main theme. This would suggest bulls becoming more bullish. But the macro backdrop would need to be further de-risked first.

  • Copper: Some catching up to do

    12 February 2019

    Copper has enjoyed a solid rebound since the start of the year, which we primarily attribute to an improvement in macro sentiment. While we expect further upward pressure in the near term, we recognize that the path for copper prices could prove more flattish over the next month because the macro seems to be playing a relatively weaker role judging by our cross-correlation analysis. Also, the present fundamentals are seasonally weak. Given its quarter-to-date average of $5,992 per tonne, copper has some catching up to do to align with our Q1 base case of $6,230 per tonne.

  • Demand Indicators: February 12 2019

    12 February 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data February 12 2019

    12 February 2019

    Downloadable data for week February 12 2019

  • Lead: Stubborn resistance above $2,100 per tonne

    12 February 2019

    Two weeks ago, LME lead prices rallied up to $2,136 per tonne – a level not seen since August last year. They have since reversed by about $100, which highlights that there is still resistance above $2,100 per tonne that needs to be broken before higher levels can be sustained. It has capped advances on three occasions in the past six months: September and October 2018 and now January 2019. But a saucer-shaped base is now in place, which bodes well.

  • Market Summary: China’s back, so now what?

    12 February 2019

    Chinese market participants are returning after last week’s Lunar New Year holidays. So far base metal prices seem to be under pressure, but it is early days. Over the coming month or so, business activity should pick up as we move out of the low season for demand and into the high season. This should give us a better feel for the true state of the underlying economy.

  • Nickel: Recapping the nickel bull story

    12 February 2019

    Prices have pulled back after the strong run-up through January and early February. We see this as part of a natural and orderly consolidation process and could well be the precursor to another run higher, especially with LME stocks now down to five-and-a-half year lows and supply concerns lingering over Vale in the aftermath of its tailing dam disaster in Brazil. In this week’s analysis we recap the key themes in nickel’s EV bull story.

  • Technical analysis: Consolidating

    12 February 2019

    The base metals have moved into consolidation mode after their rallies off the early January lows. It is not clear yet whether consolidation will turn into reversals or form bases for the next leg higher.

  • Tin: Supply tightness almost fully priced in

    12 February 2019

    The rally in tin prices has decelerated somewhat since the start of February, which suggests that the forward supply tightness has been mostly priced in. Although present supply dynamics are tight due to the ongoing disruption in Indonesian outflows, we think that tin could be vulnerable to some profit-taking by the end of Q1, especially in a context where demand is seasonally low.

  • Zinc: Healthy price correction

    12 February 2019

    Zinc has found support around $2,600 per tonne, an area of previous technical resistance. For the moment we expect support in this area to limit a more significant correction. But rallies are still likely to attract scale-up selling amid fundamental concerns over an outlook this year for fragile demand and rising supply.