Aluminium: Caution on Chinese ‘cuts’
Not surprisingly, the focus on aluminium during LME Week was Chinese capacity changes. There was not much in the way of fresh clarity but plenty of concern – echoing our own thoughts – that start-ups and restarts may overshadow cutbacks. Prices are likely to stay elevated before the winter heating season starts on November 15, but we suspect there may be a price correction before long – if not before the year-end then at the start of 2018. This puts our price forecasts on the low side of consensus.

Copper: Bullish consensus
The key takeaways on copper from last week were nothing new really. But the talk of a tightening concentrate market outlook and solid demand with a boost from electric vehicles further down the line, helped to reinforce the bullish medium term outlook we already have modelled for copper.

Lead: Forecast raised as bullishness grows
Lead was one of the metals least talked about at LME Week, although there are noteworthy developments here, specifically that spot TCs have tightened so much that smelters now have to pay a premium to process concentrates. Lead prices are working higher again, though progress is likely to remain laboured as these are already historically high levels. But we have raised our price forecasts this week and now envisage a challenge of the important $2,900/tonne target area next year. Talk at LME Week about lead prices catching up with zinc, and a tighter lead concentrate market than zinc, support our bullish upgrade.

Nickel: Star of LME Week
Nickel stole the limelight at LME Week this year as participants focused on the electric vehicle (EV) story. Clearly this one still has legs, even though there was the acceptance that EVs and batteries won’t start to truly affect nickel’s fundamentals until next decade. We came away feeling uneasy about the sustainability of the nickel’s rally built on speculative froth.

Tin: Party pooper
Tin sat out the LME Week party, being the only metal to register a fall in prices. Looking forward, this market lacks depth and is therefore vulnerable to sharp moves in either direction when liquidity dries up. Against this backdrop, we expect LME tin to trade in a wide range of $18,500-21,000/tonne, with a bias to the bottom end in the shorter term, but gravitating to the top end throughout 2018 as excessive speculative pessimism currently in the price is unwound on the back of stronger forward fundamentals.

Zinc: The top of the market is near
There were fewer zinc bulls at LME Week this year, and those that remain are less bullish than they were. There is a sense that although there may still be room on the upside for prices, the top of the market is near. Fundamentally at least, deficits will start shrinking from here on as the market rebalances gradually over 2018-19.

Funds: Speculative length may continue to grow
Although there was a degree of book squaring ahead of LME Week, overall we think speculative length may continue to build across the base metals complex, at least in short term, as sentiment at events last week was upbeat and prices are still carrying good momentum.

Technicals: Consolidation continues
Consolidation is ongoing after the recent highs, with some metals better placed than others to try higher again.