Things You May Need To Know About Base Metals’ Price Movements

  • Oct 31, 2018 AEDT
  • Team Kalkine
Things You May Need To Know About Base Metals’ Price Movements

Among the base metals, Copper prices have faced a major fall from the start of the year. Copper made a high in the month of January at the levels of $ 3.287. The commodity managed to touch the higher levels of January in the month of June the after few consecutive monthly falls.

On a recent poll conducted by Reuters, Analysts now expect rebound in copper movements supported by the strong demand/supply data. However, analysts are not so much confident about the Zinc move which will be held back by the rising output.

The London metal exchange has recorded 13% fall so far in this year, the fall was mainly due to the trade tensions and slow growth measured across China, top consumers of metal. Despite signals of potential shortage of many metals, signs of growth and positive move was not seen on the exchange and corresponding commodity. According to the median forecast made by 30 analysts, spot copper price is averaged around $6699 a tonne in 2019. Recently, LME copper was seen around $US 6032 a tonne. 

At present, geo political concerns are keeping heavy weight on all commodities and subsequently keeping copper price towards lower side, but as soon as signals of resolution towards trade war are reported in the markets, and with the release of healthy macro numbers from China, the positive impact can be seen on the commodity movements. However, poll conducted among the analysts during the month of July this year reported  shortages next year and they have reduced their forecast consensus of a global deficit from 151000 tonnes to 36000 - 44000 tonnes. Surplus was estimated to be 13500 tonnes this year against earlier estimated shortfall of 129000 tonnes. This came at the back of the failure of a strike planned at top mine Escondida.

Technically, the commodity is trading below the mean deviation of bollinger bands and Moving Average Convergence Divergence is in negative territory giving signals of further down move in near term. Copper has been trading around the levels of $2.69 / lb.

Then, the London metal exchange posted Zinc as the worst preforming metal so far this year. Zinc has approximately dropped by 20% and no signals for rebound are so far indicated on the charts. On account of macroeconomic concerns that have impacted nearly all base metals in general, this commodity was also impacted to a greater extent. Analysts estimate that increasing amounts of ore from mines will move to smelters and this will aggravate the supply shortage of the commodity from next year. The consensus forecast has thus been reduced for an average cash Zinc to $2732 tonne for 2019; and this estimate is 6% down from the previous forecast.

On the other hand, sentiments on nickel have been slightly positive and the same has been the best performing LME metal for most part of this year. Analysts estimate the cash nickel price to average $14,200 a tonne next year, reflecting a jump of 18 percent from current levels.

With geopolitical concerns across the globe, major base metals have taken a hit. Supportive macro-economic environment will take the base metals back to positive momentum. At current juncture however with no signals of significantly improved conditions, fall is seen across most of the base metals.


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