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

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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

  • Metals prices robust following Chinese stimulus

    Free

    16 January 2019

    The base metals were firmer across the board this morning, after further temporary stimulus measures from China gave sentiment a boost. But continuing macro uncertainties may mean the market is unlikely to have the confidence to get too bullish yet. Indeed, the trend for the last several months has been that attempted rallies are capped as short-covering peters out and buyers do not feel the need to chase prices higher.

  • Metals prices consolidate while uncertainty, firmer dollar cap the upside

    Free

    17 January 2019

    Base metals exhibited mixed movements while consolidating this morning. The metals are split into two camps with nickel and tin trending higher, albeit consolidating this morning, while the rest are entrenched in their sideways ranges as they await further direction either from the fundamentals, or more likely from political and economic developments.

  • Market Summary: Pressure growing to boost flagging demand-side fundamentals

    15 January 2019

    Overall the supply fundamentals across most of the base metals continue to tighten, or at least remain tight. But the outlook for demand is where the weakness is. The more the global economy weakens, the less impact tightening supply fundamentals will have on metal prices. However, should the demand outlook get a meaningful boost – from Chinese stimulus or a US-China trade deal – then the focus of the base metal market will return to bullish supply-side factors. Given deteriorating global economic data, the pressure to stimulate China’s economy and to find a trade deal is growing more urgent.

  • Aluminium: Remaining under selling pressure

    15 January 2019

    The prospect of rising supply at a time when global consumption is uncertain does not bode well for sentiment in aluminium at the moment. Net speculative fund positioning makes a strong statement that fund managers prefer to be sellers for now. As such, downside pressure is likely to weigh a little longer on aluminium prices though, technically, there are some signs of base building.

  • Technical analysis: Trying higher, but without much conviction

    15 January 2019

    Most base metals are struggling to make progress on the upside, but have been having a go. Buying pressure could pick up if nearby resistance levels can be overcome, but momentum is not convincing.

  • Copper: Expect some short-covering in near term

    15 January 2019

    Copper has strengthened only slightly since the start of the year, underperforming somewhat the rest of the base metals complex, despite this market having among the tightest fundamentals of the group. However, the positive turn in Chinese macro sentiment, caused by easing trade tensions rather than strengthening macro data, should eventually exert stronger upward pressure on the red metal and tighten spreads, especially when considering its too-light positioning after excessive bearishness in 2018

  • Lead: Waiting for better China sentiment

    15 January 2019

    Lead prices started to recover last week, rising off a low of $1,932.50 per tonne on January 3, but resistance was evident above $2,000 per tonne. With prices now in the middle of the range seen since August, it looks as though they will remain stuck until a clear directional catalyst emerges. That might require more clarity about Chinese stimulus measures or any US/China trade deal.

  • Nickel: Bright start to the year

    15 January 2019

    Nickel prices have rallied well so far this month, partly on account of being technically oversold previously, but also reflecting an improvement in broad risk sentiment. The nickel market’s own indicators are also a little brighter too; LME stock outflows have accelerated, cancelled warrants have picked up and spreads have tightened, for example, reflecting firmer demand.

  • Tin: All about supply tightness

    15 January 2019

    Tin is the second-best performing base metal so far in 2019 after being the most resilient in 2018. While the positive turn in macro sentiment is supportive of tin, the increased supply tightness from Indonesia is, in our view, the main driver behind the rally. Although the disruption in Indonesian tin flows may prove short-lived, there is still additional upside for tin prices in near term.

  • Zinc: Q4 miners’ results may set price tone

    15 January 2019

    On the surface, the zinc market looks fairly balanced at present, so there may be some reluctance to chase prices higher, or lower. Aside from macro themes, the market will also be paying close attention to producer results and guidance revisions over the coming weeks now that miners’ Q4 reporting season has started.

  • Base metals investment analysis: No room for bullishness until China macro situation improves

    15 January 2019

    China’s December trade data released in the past few days provided investors with an opportunity to gauge the China’s economic health. The data only vindicate investors’ risk-off stance towards the metals as declines in both China’s exports and imports paint a picture of deteriorating demand late last year. More economic stimulus is coming, but base metal investors will need to be confident that the economy has at least stabilized before they look to rebuild length in the base metals.

  • Demand Indicators: January 15 2019

    15 January 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data January 15 2019

    15 January 2019

    Downloadable data for week January 15 2019

Breaking Views

  • Metals prices consolidate while uncertainty, firmer dollar cap the upside

    Free

    17 January 2019

    Base metals exhibited mixed movements while consolidating this morning. The metals are split into two camps with nickel and tin trending higher, albeit consolidating this morning, while the rest are entrenched in their sideways ranges as they await further direction either from the fundamentals, or more likely from political and economic developments.

  • Metals prices robust following Chinese stimulus

    Free

    16 January 2019

    The base metals were firmer across the board this morning, after further temporary stimulus measures from China gave sentiment a boost. But continuing macro uncertainties may mean the market is unlikely to have the confidence to get too bullish yet. Indeed, the trend for the last several months has been that attempted rallies are capped as short-covering peters out and buyers do not feel the need to chase prices higher.

  • Monday's price weakness attracts dip-buying after China stimulates its economy

    Free

    15 January 2019

    LME base metals prices were firmer across the board this morning. Bargain hunting stepped in to take advantage of Monday’s price weakness and markets received a confidence boost after China cut some taxes.

  • Base metals prices mostly weaker following poor Chinese trade data

    Free

    14 January 2019

    Tin was the only base metal trading in positive territory this morning after the complex was knocked by disappointing Chinese trade data. Some optimism on trade talks or more news about Chinese economic stimulus may help to restore the more bullish sentiment of last week

  • Strong start to trading day across the LME complex

    Free

    11 January 2019

    The base metals are stronger this morning, led by zinc and nickel. Volumes have been above average and the US dollar has been weaker.

  • 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.