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

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January 2019 | Base Metals

Forecasting accuracy scorecard for 2018

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Fastmarkets MB Research has a very good track record of producing accurate price forecasts for the base metals. In Fastmarkets’ Apex survey, which ranks the forecasting accuracy of more than 20 commodity bank analysts and trading desks, we regularly feature in the top-five leader boards. 

Bronze for Fastmarkets 
In the latest results, published last week, we took the number three spot for overall accuracy during 2018. In other words, after averaging our price forecasting accuracy across all six base metals over all four quarters of 2018, we ranked third overall with an accuracy of 96.8%. 

Unrivalled consistency over the past 5 years 
This would have been a high enough score to top the 2017 leader board, but we finished fourth that year with 95.6%, albeit only 0.8% off top spot. 

We also made it on to the annual leader boards in each of the previous three years, ranking second in 2016 with an average accuracy of 96.8%, fifth in 2015 with 91.9% and fourth in 2014 with 95.9%.  

We are the only forecaster to feature in the Apex top-five leader board in each of the last five years, which demonstrates unrivalled consistency in accurate base metal price forecasting. 

Bullish bias was right in H1 2018, but we were too bullish in H2
On a quarterly basis, we went into 2018 on the back of being the most accurate quarterly forecaster in Q4 2017 (averaging 99.4% across all base metals) and we stayed on the leader board throughout H1 2018 (averaging 98.0% across Q1 and Q2). Our bullish bias served us well as prices generally performed strongly in the first half last year. 

But we dropped off the leader board during H2 2018. In hindsight, we were too bullish during this period. Although we had revised down our price forecasts as trade war concerns and slowing Chinese economic growth sapped risk sentiment, the fundamentals of the base metal markets themselves remained fairly tight. We thought this would support prices more than it ultimately did.  

It has been a strong start to 2019 so far. In part we think this reflects the fact that prices overshot on the downside late last year and are now readjusting to those tight fundamentals we recognized then. 

Andrew Cole