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Base Metals Forecaster

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

Latest Issue

  • High prices attracting selling; waiting to see where support comes in

    18 October 2017

    Scale up selling has hit copper, and the other metals that were struggling to push higher have also fallen. We should now get an update on how bullish underlying sentiment is by seeing how far prices pull back and how long it is before they rebound again.

  • Market Summary: Price forecasts raised

    17 October 2017

    Base metals seem to be taking it in turns to extend their rallies to fresh highs, perhaps as speculators rotate to some degree. It is copper’s turn this week. What is clear is that sentiment clearly remains bullish – and slightly more bullish than we had previously allowed for. We have raised most of our price forecast this week, but see plenty of reasons for caution, so upgrades have been relatively modest.

  • Aluminium: About time

    17 October 2017

    We get the impression that there is little appetite among investors to increase bullish exposure at the moment, which suggests to us that Chinese capacity closures are largely priced in. It’s about time. Although the technical picture still looks bullish, we would not be surprised if prices continue to struggle to push convincingly higher from here and we believe further consolidation is more likely in the near term.

  • Technical analysis: Technical momentum still bullish

    17 October 2017

    Copper and zinc are in correction mode, while the others are largely consolidating. The consolidators could go either way, but purely from a technical perspective the upside is favoured.

  • Copper: To $7,000, and beyond?

    17 October 2017

    Copper prices started this week rallying strongly, hurdling their September high at $6,970/tonne. They have raced towards our next technical target of $7,212/tonne, the peak from July 2014. Good trade data out of China, that showed strong imports and exports, combined with generally good economic indicators and improved economic forecasts are helping to underpin bullish sentiment. Fresh talk of China restricting scrap imports has excited the bulls again. But we still fear prices are overshooting. We have raised our price forecasts, but still see the 2018 average below $7,000/tonne.

  • Lead: Consolidation continues in high ground

    17 October 2017

    Lead prices are at historically high levels and the fact that they have for now run into overhead supply around $2,600/tonne suggests producers are content to lock-in these values. With an underlying supply deficit, low visible stocks and prices in a strong bull market, it is hard to call an end to the rally at the moment. But with sky-high zinc prices too, there is always the possibility that more idle Zn-Pb mine production capacity will be restarted, which could prompt a major price correction in both metals.

  • Nickel: Following copper’s lead

    17 October 2017

    Short-covering has seen nickel prices rebound robustly since confirming a base in the mid-to-low $10,000s at the end of September. They have followed copper’s rally and have reached the high $11,000s already so, technically at least, a challenge of the September high at $12,380/tonne seems likely.

  • Tin: $21,000/tonne unbreakable

    17 October 2017

    In line with our expectations, LME tin has been unable to break decisively above $21,000/tonne, confirming the presence of heavy selling pressure around this key technical level. While the present dynamics in the SHFE/LME prices do not suggest an increase in Chinese exports yet, we think it is only a question of time. Against this backdrop, the LME tin market should become looser, with higher inventories, lower prices, and weaker premiums on the way.

  • Zinc: Cautious upgrade

    17 October 2017

    We have revised up our Q4 price forecasts, with our previous high-case scenario becoming our new base case. But our forecast further out remains unchanged, largely as we are still modelling a far more fundamentally balanced market in 2018, and as news of mine restarts and project start-ups next year will trigger profit taking and ease tightness further.

  • Base metals investment analysis: Keen on copper, ignoring unfashionable lead

    17 October 2017

    Even before this week’s rally in copper prices, recent COT data has shown funds starting to get more interested in copper again. We would have expected greater interest on the long side of lead too, but that has not been the case. There are a few possible reasons, but we wait to see if another up-leg in lead prices attracts more fund involvement.

  • Demand Indicators October 17 2017

    17 October 2017

    Demand indicators for the base metals market

  • Downloadable Base Metals Weekly Data October 17 2017

    17 October 2017

    Downloadable data for week October 17 2017

Breaking Views

  • High prices attracting selling; waiting to see where support comes in

    18 October 2017

    Scale up selling has hit copper, and the other metals that were struggling to push higher have also fallen. We should now get an update on how bullish underlying sentiment is by seeing how far prices pull back and how long it is before they rebound again.

  • Copper pushes up to three-year highs

    16 October 2017

    The base metals have started the week strongly, with copper pushing above $7,000/tonne to its highest level since September 2014. Nickel is strong too, but still below its summer high. The other metals are still consolidating in high ground this morning.

  • China set to dominate economic agenda this week; Yellen talks up 'gradual' tightening

    16 October 2017

    China is likely to dominate this week as the five-yearly Communist Party Congress will commence in Beijing. President Xi Jinping is widely expected to be re-elected, allowing him to make deeper reforms to the economy, particularly more stringent measures aimed at deleveraging debt risks.

  • Good Chinese trade data supportive for metals

    13 October 2017

    As we pointed out earlier in the week, copper and nickel had room on the upside and prices are climbing accordingly; while the base metals in or near high ground are having to absorb selling. They remain well placed to extend higher and a rebound in China’s iron ore and steel prices, combined with good Chinese trade data today, may well be the catalysts.

  • LME copper, nickel prices hold onto gains; the rest absorb selling

    12 October 2017

    Base metals prices are consolidating this morning. The metals in or near high ground are having to absorb selling, which is capping the upside and leading to some pullbacks. Copper and nickel prices that are still some way below their peaks seem to be working higher more easily.

  • 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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