Aluminium: Poised for a technical breakout
Fears over a second wave of Covid-19 continue to grow, forcing prices of aluminium and the other base metals to take a pause. Our base-case scenario is that countries will respond more efficiently to contain the virus spread, so economic activity and metal demand should continue to rebound in the second half of the year. 

Technically, London Metal Exchange aluminium is at a significant juncture in that the recent consolidation has relieved the overbought conditions and set up an imminent bullish crossover between the 20-day and 100-day moving averages - the latter last at $1,592 per tonne. This could trigger a fresh round of technical buying with a short-term target of $1,680 per tonne.

Copper: Global refined demand forecasts trimmed
We have revised our refined copper consumption forecasts this week, with global growth now seen contracting by a deeper 4.2% as our new projection for a smaller decline in China was outweighed by a larger decline in the rest of the world. The global supply surplus this year has increased and the deficit for next year decreased slightly. 

Since financial conditions are set to remain easy for a long period of time; the uptrend in copper prices should prevail, especially if United States-China trade tensions continue to ease. The second-quarter-to-date average LME copper price of $5,320 per tonne continues to move toward our base-case forecast for this quarter of $5,380 per tonne.

Lead: Covid-related supply concerns growing again
From a demand point of view, the rebound in lead prices looks excessive, but perhaps the market is starting to build in the possibility of more supply disruptions as the spread of Covid-19 gathers pace in major lead-producing countries in South America and elsewhere. Away from the fundamentals, lead has been buoyed alongside the other metals as investors follow the liquidity rush that central banks are providing to the markets.

Nickel: Consolidation continues
We said last week that nickel prices were in consolidation mode, and this remains the case. We flagged up important support around $12,400 per tonne that needed to hold in order to avoid a breakdown. In line with our base-case forecast, support is holding so far, which keeps our bullish third-quarter outlook intact.

Tin: Healthy pause
Tin has traded sideways recently, consolidating its significant gains made from March. Although we acknowledge the weakness in demand (we have revised further downward our forecasts in this regard), we think that tin prices could continue to move higher in the near term, reflecting tighter output trends, macro positivity and brighter investor sentiment.

Zinc: Constructive consolidation
Zinc prices are benefiting from technical, fundamental and macro sources of support, facilitating consolidation comfortably above the $2,000-per-tonne level. We continue to forecast this sentiment prevailing overall in the third quarter, but prices also likely will remain volatile.

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