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Base Metals Market Tracker

Base Metals Market Tracker provides independent forecasting and coverage of all the key parameters affecting market movements for copper, aluminium, nickel, tin, lead and zinc. The service brings you accurate and reliable pricing information for all the key physical and financial transactions taking place within the base metals arena.

Latest Issue

  • Lead prices run higher, other metals remain rangebound

    24 May 2018

    Lead is rallying strongly, with prices up 11.6% since May 3. Copper, aluminium and nickel prices are meandering sideways, while zinc and tin prices have been under pressure. Without stronger economic growth, which seems unlikely with the continuing uncertainty over the world’s trade relations with the US, base metals are likely to continue trading generally sideways.

  • Market Summary: “On hold”

    22 May 2018

    The main news of the past week that potentially impacts all the base metals is that the US-China trade war is being put “on hold,” but markets are treating the news cautiously at the moment, and rightly so. It does have the potential though to reduce some key risks threatening global growth and weighing on sentiment in the base metals. A pickup in economic data would be another supportive factor for metal sentiment, as would an end to the US dollar’s rally.

  • Aluminium: Adjusting well

    22 May 2018

    Consumers are focusing on diversifying sources of supply to mitigate sanction-related risks, and the Chinese aluminium market – which is oversupplied – offers an easy solution. The nearby LME backwardation has flared and should attract more inflows. As such, the aluminium market seems to be adjusting well to its new dynamics, and there is plenty of metal around. This has undermined its recent price rebound and keeps it vulnerable to further weakness if April’s supply concerns continue to subside.

  • Technical analysis: Mixed bag

    22 May 2018

    We have negative short-term technical views on aluminium, tin and zinc at the moment, but have positive technical views on copper, lead and nickel.

  • Copper: Price strength delayed until H2

    22 May 2018

    Although copper prices are consolidating below $7,000 per tonne, overall, their performance has been disappointing this quarter. While that reflects macro factors like trade war worries and a strong dollar, it is also a sign of a weaker-than-expected seasonal rebound in China’s copper demand. We think that the fundamentals of the copper market remain bright over the longer term. As such, we expect more meaningful upward pricing pressure to start re-emerging in the second half of the year when macro and the fundamental forces are expected to work in the same direction.

  • Lead: Tightening up

    22 May 2018

    Lead prices consolidated their rebound back above $2,300 per tonne last week, but started this weak strong, pushing on the $2,425 per tonne on Monday. China is back in focus with SHFE stocks falling significantly last week, and the arbitrage window opening too. ILZSG data also points to a market that remained in a supply deficit in Q1 – a deeper deficit in fact than during the same period last year. All this is fairly bullish and could conspire to maintain the recent stronger tone to lead prices. This would be in line with our base case price forecasts.

  • Nickel: Right to be bullish

    22 May 2018

    We made a brave call earlier this quarter, revising up our Q2 base case nickel price forecast to $14,260 per tonne. That compares with an MB’s Apex weighted consensus forecast of $13,574 per tonne. But with the quarter-to-date cash price averaging $14,019 per tonne already, and rising daily, going bullish certainly seems like the right call. If the current rally is maintained, even our high-case scenario for this quarter ($15,000 per tonne) will quickly move within reach.

  • Tin: The weakest link

    22 May 2018

    Tin has been the worst performing base metal this month, reflecting poorer fundamentals on the supply side. We expect tin prices to increasingly weaken in the remainder of Q2 and Q3 amid rising exchange inventories, loosening nearby spreads, and falling physical premiums. Tin prices may be most vulnerable in the summer months due to seasonally weak demand.

  • Zinc: Deficits shrinking

    22 May 2018

    As zinc prices continue to consolidate above the $3,000 per tonne level, we have this week slightly lowered our forecasts for Chinese supply and demand this year. The net effect is slightly small global deficit of 235,000 tonnes. While only about half the size of last year’s supply shortfall, this is still a clear and significant deficit, so inventories will still be drawn down again this year, which should continue to underpin prices. After already toning down our price forecasts a few weeks ago, we have not adjusted them again.

  • Base metals investment analysis: Longs gradually increasing exposure to copper again

    22 May 2018

    The latest COT data showing fund positioning in copper on the both Comex and LME show long positions gradually rebuilding.

  • Demand Indicators: May 22 2018

    22 May 2018

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data May 22 2018

    22 May 2018

    Downloadable data for week May 22 2018

Breaking Views

  • Lead prices run higher, other metals remain rangebound

    24 May 2018

    Lead is rallying strongly, with prices up 11.6% since May 3. Copper, aluminium and nickel prices are meandering sideways, while zinc and tin prices have been under pressure. Without stronger economic growth, which seems unlikely with the continuing uncertainty over the world’s trade relations with the US, base metals are likely to continue trading generally sideways.

  • Metals prices consolidate after Monday's gains

    22 May 2018

    The base metals are mostly giving back some of the gains they made on Monday, so rangebound trading continues overall. Nickel and lead seem to be the two metals with most direction, with the latter supported after the arbitrage window into China opened. The strong dollar is likely to remain a headwind.

  • Metals prices mainly firmer after US/China trade war avoided

    21 May 2018

    The base metals generally remain rangebound, but volumes have picked up and on balance the mood is more positive this morning, helped by the easing trade tensions between China and the US. The strong dollar is likely to remain a headwind though.

  • Nickel and aluminium prices have direction, the rest are listless

    18 May 2018

    The base metals are diverging this morning with the main movers being nickel, where prices have climbed 1%, and aluminium, where prices have dropped 0.6%. We would expect more broad-based strength within the complex if economic indicators begin to improve again and trade concerns subside.

  • Metals prices recover after Tuesday's show of weakness

    16 May 2018

    Base metals are little changed this morning, but this follows a day of two halves on Tuesday where prices came under pressure as the morning progressed before running into buying toward the end of the day. This typifies the market at the moment - generally rangebound but nervous.

  • More breaking views...


More analysis...

A weekly 24-page report:

  • Technical analysis and short-term trading strategies
  • Fundamental analysis and medium term forecasts on production, stocks, trade and consumption of the LME metals
  • Price-modelling and forecasting utilising high-low case scenario planning, quarterly with three year outlook
  • Analysis of speculative money flows and fund activity in the base metal commodities
  • Consensus price forecasts, quarterly to the end of 2017
  • Premiums forecasts, quarterly, forward one year, including European, US and Asian spot benchmarks for all six metals
  • Raw material price forecasts, forward one year, including alumina, copper TC/RCs and zinc TCs
  • Insights into leading industry companies
  • Independent analysis and forecasts covering all six base metals in one report

Additional data, downloadable into Excel:

  • Global supply-demand balances for all LME metals, with ten year history and two year forecast. Regional data breakdown - China, North America, Europe and ROW
  • Daily spot and forward LME prices, stocks, spreads, LME open interest and cancelled warrants by metal
  • Reported stocks by metal on a quarterly basis and demand indicators
  • Raw material prices data
  • Premiums data


All subscribers are eligible for regular individual consultations with the editor of the report.
 

 

Andrew Cole

Andrew Cole joined the Metal Bulletin group in 2000, initially as an associate editor with Industrial Minerals. He moved to Metal Bulletin Research in 2001 and has been analysing the base metals markets for the past 12 years. He is responsible for the Base Metals Weekly Market Tracker, and all aspects of MBR’s research and forecasting on the base metal markets. His price forecasts frequently rank in the leader boards of MB’s Apex analyst forecast surveys.

Andrew has also been project leader on a wide range of upstream and downstream consultancy assignments covering all the base metals and has managed the publication of a number of MBR’s non-ferrous book reports.

Andrew is an exploration geologist by training, with a PhD and practical experience in Central Asia and Africa, including the Zambian Copperbelt.                                                                                                          


Market Brief


Base metals are the major industrial non-ferrous metals other than precious metals and minor. Specifically, they are aluminium, copper, lead, nickel, tin and zinc. All six are traded on the London Metal Exchange (LME), which is the principal global marketplace for base metals accounting for abot 80% of global trade. The main exchange in China is the Shanghai Futures Exchange (SHFE), where aluminium, copper, lead and zinc are traded, while copper is also traded on the New York Commodity Exchange (Comex).

Prices are governed by the interaction between supply and demand fundamentals and the flow of investment and speculative capital into and out of the market.

The base metals’ major applications are found in industries such as automotive and transport, building and construction, intrastructure, electrical and electronics, packaging, consumer goods and batteries.

Traditional markets in Europe, the USA and Japan are still important, but have been overtaken by China during the last 10 years, which now accounts for around 40% of global production and consumption of each base metal.

Types of Base Metal

1. Aluminium

A light and durable metal that is easily rolled, extruded and recycled, aluminium is produced from bauxite via an intermediate product, alumina. Four tonnes of bauxite yields approximately two tonnes of alumina, which in turn results in about one tonne of primary aluminium out of the smelter gate. Several other ingredients are needed, but energy is the main input and most of this is consumed as electricity at the smelting stage to convert alumina to metal. It is because of the significant energy needs that primary aluminium production has increasingly gravitated towards regions of low energy cost rather than to where the metal is most needed – for example Japan, a major aluminium consumer, today has negligible smelting capacity, whereas the Middle East has established itself as a major primary aluminium production centre over the past decade. With aluminium prices tending to trade around the marginal cost of production in recent years, higher cost smelters remain under pressure.

The global aluminium market has been in a supply surplus since 2007, but excess material has been stored in financing and rent deals in warehouses, effectively keeping availability tight and elevating premiums to record high levels. However, increased regulatory scrutiny of the warehouse industry in 2013 has put premiums on a downward trajectory 

2. Copper

The most conductive – both electrically and thermally – of all the commonly available metals, copper is produced from sulphide or oxide ores typically from large open cast mines. Sulphide ores are concentrated, smelted and refined into cathode, while oxide ores can be heap-leached to produce cathode via the solvent-extraction, electowinning (SX-EW) process.

Major copper mining regions are found in the south western USA and Latin America, where Chile alone accounts for about one third of global output. The largest copper mining company in the world is Chilean state-owned producer Codelco, while the largest mine in the world is Escondida, also in Chile, but operated by global resources giant BHP Billiton. In contrast to the main centre of global copper mine production, the key region for refined copper production is Asia, led by China. The region is a major importer of concentrate and scrap.

The copper market has faced a decade of structural supply shortages created by a combination of underinvestment in new mines and a propensity for unplanned disruptions, which coincided with China’s demand boom. This underpinned high prices and a wave on fresh investments in new and expanded mining capacity. However, 2012 marked a transition to what should a new era of relatively ample supply as new projects come on line at the same time as economic growth in China and the developing world stabilises.  

3. Lead

Mined principally from ores often associated with zinc and silver, lead is a dense, ductile, low strength metal that has seen its range of industrial applications decline in recent decades in the face of environmental and health concerns, and this will continue. Currently, as much as 80% of lead produced in the world finds its way into the lead-acid storage battery market, the majority of which are used in the vehicles, but also in emergency back-up power systems and other industrial applications such as remote access power systems.

The growth of China’s automotive market over the past decade into the largest in the world has been a major driver of lead demand growth, and the explosion in popularity of electric bicycles (e-bikes) has boosted usage rates further. Lead is also still used to a small degree in the glass and plastics industries, for radiation shielding and cable sheathing.

Lead has the highest recycling rate of all the base metals, with more than 60% of production in the Western World coming from recycling, primarily of spent lead-acid batteries. The ratio is closer to 40% in China, which suggests that there is great potential for growth in secondary production in this country as environmental and recycling standards catch up to those of the West.

4. Nickel

Rarely visible in its pure form in modern life, nickel’s principal applications are through its performance as a nickel-rich alloy or through the properties it bestows on other metals as an alloying addition. Nickel-bearing alloys, with their high temperature performance, are crucial to the design of modern aircraft engines and the metal is also vitally important in stainless steel production – a sector that accounts for about two-thirds of all nickel usage.

Nickel ores fall into three types: nickel-copper sulphides, laterites and silicates, with processing methods different for each type. The sulphide ores, of which Canadian, Russian and Australian deposits are best known, are concentrates and refined into high-purity metal, usually producing copper and platinum group metals en-route. Other ores, largely mined in Indonesia, New Caledonia, the Philippines, Cuba, Brazil and Colombia, have a high iron content and are a natural feed for producing ferro-nickel or nickel pig iron (NPI) for the steel industry.

New sulphide deposits are far and far between, leaving the future of the nickel industry increasingly dependent upon laterites. In recent years, the new generation of nickel laterite-based mega projects – employing pressure acid leaching or ferro-nickel smelting – have proved to be capital intensive and technologically challenging, leading to lengthy commissioning and ramp-up delays and even project suspensions. The void has been filled by a boom in NPI production in China, but the nickel market is now characterised by major oversupply. 

5. Tin

The only tin ore with economic value is cassiterite. It is found in hard-rock deposits in quartz veins or in the eroded remnants of these orebodies that have been re-concentrated in alluvial or eluvial deposits in riverbeds or offshore. Hardrock mining has gradually lost ground to more cost-effective gravel pumps and dredging operations, with Indonesia and China the main centres of modern ore production.

The tin market is arguably the fundamentally tightest of all the base metals, and this is mainly a function of the supply side, due to a lack of investment in exploration and project development in recent decades, tightening environmental regulations in China and Indonesia, unrest in the DRC and declining ore grades in Peru. Tin prices will need to remain high in order to incentivise new investments in the coming years.

On the demand side, about half of all tin produced goes into the manufacture of solder for the electronics industry. Tinplate and plastics are the next most important sectors for tin usages, but the metal also finds applications in glassmaking and fire retardants.

6. Zinc

Zinc’s greatest property lies in acting as a protector for other substrates, especially steel. Zinc-coated steels – using mainly the continuous hot-dip galvanising method on sheet or wire – now absorb just over half of all zinc produced. When alloyed with copper, a series of brasses provides for the second-largest offtake of zinc, and this has overtaken the diecast sector in volume terms.

Geologically, zinc ore mainly takes the form of sphalerite and commonly occurs with lead, silver and copper ores in polymetallic deposits. Ore is concentrated and refined and China has grown to be the largest producer in the world of mined and refined zinc. It is also the largest consumer.

The zinc market has been in structural oversupply since 2007, but the closure of a number of major mines due to reserve exhaustion during the 2012-2016 period (such as Brunswick and Perseverance in Canada, Lisheen in Ireland and Century in Australia) should see supply tighten up, though not to the extent that supply deficits become commonplace. Therefore, zinc is expected to remain lower priced than its sister metal lead, which is a fundamentally tighter market.



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