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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

  • Market Summary: Broader tensions masking still-constructive fundamentals

    21 May 2019

    With the US-China trade dispute escalating again and now geopolitical tensions between the US Iran rising, there is less and less appetite for risk in financial markets. Base metals continue to feel the fallout, despite plenty of signs of tightness in the fundamentals.

  • Aluminium: Base-building amid cross currents

    21 May 2019

    There are many cross-currents buffeting the aluminium market, but the micro-dynamics are starting to appear more price supportive in the short term. This, combined with the potential upside in its technical configuration, could well be a recipe for a counter-reversal to sustain an upward price move in the coming weeks.

  • Technical analysis: Focus still on the downside

    21 May 2019

    Testing the solidity of support levels remains the short-term focus of technical traders and in this environment further breaches cannot be ruled out.

  • Copper: Still being undermined by macro negativity

    21 May 2019

    The macro negativity stemming from the US-China trade/technology spat and softer China’s economic growth still threatens to push copper prices lower in the near term. Although they have managed to remain above $6,000 per tonne, an eventual break below this psychological seems likely in the coming days, which could elicit further speculative selling.

  • Lead: Prices rebound on bargain hunting

    21 May 2019

    After lead prices slipped to a three-year low of $1,773 per tonne on Monday May 13, they spent the rest of the weak rebounding to end at $1,825 per tonne. Some good news was that President Donald Trump delayed for six months his decision on whether to impose tariffs against imported vehicles and vehicle parts from Japan and Europe. And China’s 10% tariff on imports of lead concentrate from the US will now remain in place.

  • Nickel: More positives than negatives

    21 May 2019

    For nickel, although a weak stainless steel market is compounding broader macro/geopolitical risk-off sentiment at the moment, there are more fundamental positives than negatives for the nickel market that collectively are helping to support the downside for nickel prices during this soft patch by attracting bargain hunting. They are also laying the foundation for a fast recovery in prices when risk-appetite recovers.

  • Tin: Resilient price unlikely to last

    21 May 2019

    Although LME tin prices have proven relatively resilient in the face of the renewed escalation in the US-China trade/tech dispute, we think that refined tin market conditions are loosening amid a weaker fundamental backdrop, namely – softer demand from the solder sector and expectations of recovering supply from Indonesia. In this context, we expect LME tin prices to move lower over the next month until a recovery a takes place at the end of the quarter.

  • Zinc: Tight fundamentals ignored

    21 May 2019

    Despite prices falling, there remain some very supportive fundamental themes in zinc. Falling SHFE stocks are one, and they back up the notion that smelters there have yet to meaningfully raise their utilization rates, thereby keeping the domestic market structurally tight. And the lack of significant deliveries into the LME system despite the biggest backwardation in 13 years suggests the ex-China market remains very tight too. But price sentiment is still being driven by concerns over US-China trade tensions, and in this environment price risks remain to the downside in the short term or until the fundamentals can reassert themselves.

  • Base metals investment analysis: Speculative short positioning deepening

    21 May 2019

    The latest COT reports from the CFTC and LME continue to show speculative net length across the base metals becoming increasingly bearish.

  • Demand Indicators: May 21 2019

    21 May 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data May 21 2019

    21 May 2019

    Downloadable data for week May 21 2019.

Breaking Views

  • LME base metals prices positive despite escalation in US-China trade war

    Free

    10 May 2019

    While US-China trade talks continue, the market seems to be clinging on for an eleventh-hour deal this morning, Friday May 10, because key markets are holding up surprisingly well. But, if a deal does not miraculously emerge soon then further disappointment is likely to set in

  • Metal price weakness attracts dip-buying

    Free

    08 May 2019

    With US-China trade talks appearing to have soured, it is somewhat surprising that the metals markets are not weaker. But, confirmation that Chinese vice premier Liu He’s trip to Washington on Thursday May 9 is to go ahead, suggests there may still be a chance of a trade deal and that seems to be encouraging some dip-buying in the metals

  • Disappointing Chinese PMI data keeps LME base metals prices on back foot

    Free

    30 April 2019

    LME base metals prices were mostly treading water this morning, Tuesday April 30, while the market digests the disappointing Chinese data released earlier. This, combined with the fact that many Asian market participants are away for holidays this week, is likely to lead to subdued trading – but reduced liquidity could also lead to increased volatility.

  • Mixed start to the week, but some dip-buying evident

    Free

    29 April 2019

    Base metals prices have generally been weak in recent days but some dip-buying seems to be emerging, which for now is providing support. But, with much of Asia in, or heading for, Golden Week and Labor Day holidays, liquidity is likely to shrink either leading to more volatility, or quiet trading in the days ahead.

  • Base metals firmer across the board; recent price weakness runs into support

    Free

    26 April 2019

    Generally, LME prices have been weak in recent days and the strong dollar has been a factor in that, but dip-buying appears to be providing support in morning trading on Friday April 26.

  • 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.