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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

  • Aluminium prices edge up further this morning, others tread water anticipating direction

    Free

    20 March 2019

    Aluminium was the strongest LME metal this morning, setting fresh highs for the year. The others are generally consolidating. Overall, the complex seems to be waiting for fresh direction from US-China trade talks and for the most part are well placed to extend this year’s rallies. But that could mean they are also setting themselves up for a fall, should disappointing news emerge.

  • Dollar rebound pressures metals prices

    Free

    22 March 2019

    With LME base metals prices having come off their weekly highs, most have remained under selling pressure this morning, Friday March 22nd, compounded by a stronger US dollar. Overall, however, the base metals complex remains in consolidation mode.

  • Metals prices start week poorly amid risk-off sentiment

    Free

    25 March 2019

    LME base metal prices ran into follow-through selling on the morning of Monday March 25 after weak economic data points released at the end of last week continued to undermine the demand outlook.

  • Market Summary: Waiting for brighter demand signals

    19 March 2019

    Base metals have generally had a strong run so far this year, on optimism about an improving macro outlook, and on low stocks and supply disruptions. However, this month the price recoveries are pausing, which is understandable given that current demand conditions remain subdued. We remain quite neutral on the complex at the moment until demand indicators start to improve.

  • Aluminium: Time to play catch-up

    19 March 2019

    Aluminium has been the laggard of the base metals complex this year, but we wonder whether the risks are shifting to the upside. It has some catching up to do relative to its peers. We would look more to the technical picture than aluminium’s fundamentals to trigger that correction, with fund short-covering being the driver given how this market is unique in still carrying a net speculative short position. So there is potential for upside surprises for aluminium prices in the short term.

  • Technical analysis: Mostly consolidation

    19 March 2019

    From a technical perspective, base metal prices remain in consolidation mode, though nickel and potentially aluminium look best placed to break out of those holding patterns to the upside.

  • Copper: Weak demand-side fundamentals

    19 March 2019

    Copper prices have consolidated somewhat since late February, with LME stock inflows and rewarrantings in the past week dampening further upside potential for the moment. While we see further consolidation into the month-end, we believe that a new uptrend will emerge in Q2 on the back of stronger copper demand from China. In this week’s analysis, we highlight the main takeaways from Fastmarkets’ International Copper Conference in Amsterdam, which we attended last week.

  • Lead: Looking the weakest of the LME metals

    19 March 2019

    After reaching a seven month high at $2,179.50 per tonne on February 28, lead prices now around $2,030 per tonne look set to test technical support from the mid-February low at $2,011 per tonne. The main change last week was the re-warranting of cancelled warrants, which sent the signal to the market that LME lead stocks are not about to accelerate lower anytime soon.

  • Nickel: Remaining bullish

    19 March 2019

    Supported by steady LME stock outflows, nickel prices remain robust and may be completing a second ‘higher-low’ in the uptrend off the early-January bottom. The technical indicators should confirm this in the coming days. On the fundamentals, we have raised our Q1 Chinese production forecast, which, all other things being equal, has reduced the global annual deficit for 2019 by 21,000 tonnes to 63,000 tonnes.

  • Tin: All about Indonesia

    19 March 2019

    Tin has weakened the most among the base metals complex since the start of March, which is primarily because of the recent developments in Indonesia that are set to ease supply tightness in the next month or so. Our analysis suggests that the downside potential for tin prices is great over the next two months, yet, represents a buying opportunity because the long-term fundamental picture remains tight.

  • Zinc: Supply/demand revisions raise 2019 deficit

    19 March 2019

    We have cut our outlook for Chinese refined zinc output in H1 as a result of the sharp drop in production in January-February. At the same time, the continued rise in SHFE stocks suggest demand has underwhelmed, and our H1 consumption forecast has been downgraded also. Nevertheless the net effect will be to delay the expected fundamental rebalancing, increasing our expectations for the full-year deficit in 2019 to 206,000 tonnes from ~150,000 tonnes previously.

  • Base metals investment analysis: Funds favouring bets on spreads rather than outright prices

    19 March 2019

    Base metal fund strategies are shifting due to diminishing volatility in copper’s outright price, and better visibility over market fundamentals ahead of an unpredictable macroeconomic environment.

  • Demand Indicators: March 19 2019

    19 March 2019

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data March 19 2019

    19 March 2019

    Downloadable data for week March 19 2019

Breaking Views

  • Metals prices start week poorly amid risk-off sentiment

    Free

    25 March 2019

    LME base metal prices ran into follow-through selling on the morning of Monday March 25 after weak economic data points released at the end of last week continued to undermine the demand outlook.

  • Dollar rebound pressures metals prices

    Free

    22 March 2019

    With LME base metals prices having come off their weekly highs, most have remained under selling pressure this morning, Friday March 22nd, compounded by a stronger US dollar. Overall, however, the base metals complex remains in consolidation mode.

  • Aluminium prices edge up further this morning, others tread water anticipating direction

    Free

    20 March 2019

    Aluminium was the strongest LME metal this morning, setting fresh highs for the year. The others are generally consolidating. Overall, the complex seems to be waiting for fresh direction from US-China trade talks and for the most part are well placed to extend this year’s rallies. But that could mean they are also setting themselves up for a fall, should disappointing news emerge.

  • Unchanged to slightly higher this morning

    Free

    19 March 2019

    LME base metals prices are unchanged to slightly higher this morning as consolidation continues while market participants wait for fresh direction from US/China trade talks.

  • Metals prices consolidate, waiting for fresh direction

    Free

    18 March 2019

    The metals are consolidating below recent highs, with lead prices looking the weakest, while copper prices are holding up well considering the stock increases that were seen last Thursday and Friday. Overall, the metals seem to be waiting for fresh direction and while they wait they are drifting lower.

  • 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.