Aluminium: Macro sentiment only temporarily negative
Aluminium and the other base metals have been recently undermined by a pause in global risk-taking appetite and a rebound in the dollar that have triggered some profit-taking. We remain positive for the aluminium price trend in the coming weeks in line with our recent price forecast upgrade. The traditional strong demand season in September and October is under way and the broad reflationary macro narrative remains in play.

Copper: Price and demand forecasts revised
We have revised lower by $100 per tonne our third-quarter price forecast to account for the slower price momentum recently. Having said that, we remain constructive on copper prices in the quarters ahead, expecting the reflationary environment to prevail and the global refined copper market to swing back into deficit in 2021. We have also revised our copper demand forecasts this week, resulting in a slightly smaller surplus this year and a larger deficit next year.

Lead: After consolidation, price risks swinging to the upside
Lead prices were on a back footing last week as the recently less-supportive macro backdrop was compounded by a rise in LME lead stocks. Together with wider spreads and soft premiums, this suggests there is comfortable availability and supports our view that this market is oversupplied. Investment funds may have the same view too as of all the base metals they are positioned least bullishly in lead. But potentially that leaves the risk to lead prices skewed to the upside if the rising tide of liquidity is put to work in making lead play catch-up with its peers.

Nickel: Bullish supply disruption narrative persists
While the base metals have largely been consolidating over the past week, nickel is being kept more elevated than others by a bullish fundamental narrative around supply disruptions. As the focus switches back to the broader reflationary theme, this narrative positions nickel well to outperform on the upside again. We have raised our price forecasts this week, marking them to market.

Tin: Robust consumer demand from China
Tin prices have come under pressure of late due to the more negative macro dynamics affecting the broader complex, but also softer refined market conditions reflected in rising visible inventories. That said, we think refined tin consumption should continue to recover (thanks to China), while refined output trends should tighten in Asia, in part caused by the tightness in the global concentrate market. We have revised slightly higher our third-quarter price forecasts as well as our Chinese and US demand forecasts.

Zinc: Demand outlook recovering
After consolidating lower last week, the LME zinc price rediscovered its previous positive momentum at the start of this week, supported by evidence that China’s broad-based recovery continues to gather momentum. In view of the better data recently, we have raised our forecast for Chinese demand this year, which in turn has reduced the size of the surplus we had been forecasting to around 200,000 tonnes. 

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