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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

  • Consolidation this morning as trade tensions resurface

    Free

    17 July 2019

    LME prices were mixed during early trading on Wednesday, July 17, as relations between China and the US remain frosty following a report that China will sanction US firms that sell weapons to Taiwan. In addition, US President Donald Trump has threatened additional tariffs on China after it failed to increase purchases of US agriculture products.

  • Nickel strength inspires gains across the base metals complex

    Free

    18 July 2019

    Misplaced optimism seems to be driving gains in the LME nickel price, which extended its rally further this morning, July 18. Granted there is growing concern over supply from Indonesia, but this remains a long-term play. And in the present, global economic growth remains weak and US-China trade tensions continue.

  • Base metals prices spurred higher by dovish Fed speech, weaker dollar

    Free

    19 July 2019

    Despite renewed geopolitical tensions, dovish Federal Reserve comments overnight have propelled LME base metals prices higher on Friday July 19. Nickel's recent strength may also be rubbing off on the others, with copper the pick of the risers this morning.

  • Market Summary: Macro themes starting to be less of a drag

    16 July 2019

    Expectations of monetary easing by the Federal Reserve and better-than-expected Chinese economic data are supporting the base metals by helping the weaker ones to build bases and the more buoyant ones to push on. If the macro backdrop can remain a more positive influence instead of the negative force it has been for some months now, we should see the base metals make some headway on the upside this quarter.

  • Aluminium: Uptrend might not last

    16 July 2019

    As long as the aluminium price remains within the ascending wedge-like pattern that has guided the market from the $1,750 per tonne region in mid-June to around $1,850 per tonne in mid-July, then further modest gains are likely in the short term. But the fundamentals do not support the uptrend given the weak short-term demand outlook and the risk of higher supply. The June-July up-move may turn out to be a bear flag.

  • Technical analysis: Working higher

    16 July 2019

    The base metals are being led higher by bullish short-term technical configurations.

  • Copper: Price rebound likely to gain traction

    16 July 2019

    Although the rebound in copper prices since mid-June has been shallow, we expect it to gain traction in the course of Q3. On the macro front, a weaker dollar supported by the Fed’s easing cycle and stronger economic growth expectations due to de-escalating trade tensions should drive copper prices higher. On the fundamental front, a likely rebound in Chinese copper consumption growth in a context of constrained refined output growth should exert a more meaningful drawdown of inventories.

  • Lead: Starting to feel more bullish again

    16 July 2019

    With an extended outage at Port Pirie coming against a backdrop of very low stocks and an underlying deficit reported by the ILZSG, coupled with the triggering of an inverse head-and-shoulders pattern of the price chart, lead’s fundamentals and technicals seemed aligned with a bullish bias. Against this backdrop we expect prices to work higher in a typically volatile fashion in Q3.

  • Nickel: All about Indonesia again

    16 July 2019

    Nickel is going from strength to strength, building bullish momentum and registering a new 2019 high near $14,000 per tonne this week on the back of brighter macro themes, but also on news last week that Indonesia is talking about banning ore exports again from 2022. Given the reliance of China’s NPI industry on Indonesian nickel ore, the 2022 ban is clearly big news and has very significant implications for a global nickel market already worried about availability next decade in light of the demand boom expected from the EV revolution.

  • Tin: Bounce-back to run on

    16 July 2019

    The rebound in the LME tin price from its July 2 low of $17,585 per tonne has lacked some strength in recent days, having rallied as much as 4.5% in the first four trading days following its bottom. However, we believe that the rebound will steepen in the near term, supported by supportive fundamental dynamics, positive price seasonality, and a stronger macro backdrop driven by a weaker dollar on more Fed easing.

  • Zinc: Forming a base

    16 July 2019

    Prices are attempting to form a base above $2,400 per tonne, and we think the risks are now shifting to the upside for the remainder of Q3 given that this is still a fundamentally very tight market. The looser spreads will also slow deliveries into LME warehouses, while fresh cancellations warn of a pick-up in outflows again even though stocks are already at low levels.

  • Base metals investment analysis: Speculators remain excessively bearish copper

    16 July 2019

    The latest CFTC data puts speculative net length in Comex copper at its lowest in three years. We this is excessively bearish and leaves copper prices vulnerable to short-covering rallies in Q3.

  • Demand Indicators: July 16 2019

    16 July 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data July 16 2019

    16 July 2019

    Downloadable data for week July 16 2019

Breaking Views

  • Base metals prices spurred higher by dovish Fed speech, weaker dollar

    Free

    19 July 2019

    Despite renewed geopolitical tensions, dovish Federal Reserve comments overnight have propelled LME base metals prices higher on Friday July 19. Nickel's recent strength may also be rubbing off on the others, with copper the pick of the risers this morning.

  • Nickel strength inspires gains across the base metals complex

    Free

    18 July 2019

    Misplaced optimism seems to be driving gains in the LME nickel price, which extended its rally further this morning, July 18. Granted there is growing concern over supply from Indonesia, but this remains a long-term play. And in the present, global economic growth remains weak and US-China trade tensions continue.

  • Consolidation this morning as trade tensions resurface

    Free

    17 July 2019

    LME prices were mixed during early trading on Wednesday, July 17, as relations between China and the US remain frosty following a report that China will sanction US firms that sell weapons to Taiwan. In addition, US President Donald Trump has threatened additional tariffs on China after it failed to increase purchases of US agriculture products.

  • Prices on divergent paths while participants digest Chinese data

    Free

    15 July 2019

    China’s economic growth slowed to 6.2% in Q2, which was in line with expectations and well within Beijing’s target of 6-6.5% for 2019, while other Chinese data out earlier this morning showed activity in June was considerably stronger. But LME three-month base metals prices have been unimpressed, giving a mixed start to a new trading week so far.

  • LME base metals prices mixed as healthy China trade surplus could unsettle trade talks

    Free

    12 July 2019

    Nickel and copper have been the highlights within the base metals complex, enjoying strong spells in recent days. But overall the group's performance is mixed as macro and geopolitical uncertainties linger and haven assets remain more in demand overall than risky assets.

  • 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.