Aluminium: Consolidation needed after technical gains
Despite structural oversupply, the London Metal Exchange aluminium price has enjoyed a technical rebound since the mid-May lows, which was in line with our short-term forecasts. But technical indicators now look overbought and the price must consolidate its recent gains to avoid rolling over to the downside again.

Copper: The worst is behind us
The LME copper price continues to recover, following its 5% rebound in April with a gain of nearly 3% in May. It has started June robustly too, stretching its uptrend since its March lows to new highs.

We maintain that the worst of the copper demand destruction caused by the global Covid-19 pandemic is behind us. We think the global refined copper market was in a 304,000-tonnes surplus in the first quarter, but the oversupply will have reduced to 42,000 tonnes in the second quarter. The market will edge closer to balance in the third and forth quarters. This should continue to underpin a recovery in copper prices.

Lead: Price forecasts lowered
The LME lead price continues to oscillate largely within a $1,600-1,700 per tonne range – still essentially building a base as opposed to rebounding like some other base metals. We expect the recovery in lead-acid battery demand will be slow and will be balanced by a recovery in scrap supply while economies re-open, even if mine supply suffers disruptions for longer. Fundamentally, that leaves little room to be bullish on lead, with the upside dependent on macro drivers instead.

Given this outlook and the relative sluggishness of lead prices off their March lows so far, we have marked-to-market our second-quarter lead price forecast and have replaced our third and fourth quarter base case forecasts with our previous low-case scenarios for each quarter. We have lowered our 2021 price forecasts too.

Nickel: New month, new momentum
The LME nickel price continues to recover toward our second-quarter average base case forecast of $12,100 per tonne. It averaged $11,958 for the quarter as of June 2 and has begun the new month with renewed positive technical momentum.

Tin: Tighter supply to be felt later this year
Tin rebounded in May alongside the other base metals, driven by positive macro forces. We expect demand to recover later this year. If supply remains as constrained as it presently is, the impact on tin premiums and prices could be significant.

Zinc: Demand rebound faces headwinds
While manufacturing activity is restarting, we are not expecting to see an impressive recovery in refined zinc demand, rather a long and slow road to recovery, particularly for auto-related demand. Accordingly, we still forecast annual contractions in year-on-year terms in global refined zinc demand in the third and fourth quarters of 2020, although not as negative as in the first two quarters of the year.

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