2016 REVIEW – BASE METALS PERFORMANCE: Metals recover from annus horribilis to close positive

At the start of 2016 the mood was dire – metals prices were trading around multi-year lows in thin trading conditions. Speculators and funds shunned the complex and, with a poor global economic outlook, the outlook was bleak.

Sentiment, however, saw a dramatic turnaround in the final quarter of the year. Prices pushed higher and turnover on the London Metal Exchange was boosted by price volatility.

November’s surge in volumes was attributed to the increase in speculator activity which started in China as hot money moved out of property and equities and into commodities. The shift was contagious and western funds jumped on board too.

This coincided with promises from US president-elect Donald Trump to increase infrastructure spending alongside more positive sentiment emanating from LME Week in London.

Miners also breathed a sigh of relief as their tumbling share prices recovered. Glencore’s share price was last at 271.05p, having climbed its way back from a record low of 73.50p in 2015. The company benefited from quick thinking, turning off mine supply for the likes of copper, zinc and lead, and making asset sales.

Zinc was the standout performer this year – at one point it attempted to take out the $3,000 per tonne level. While it failed to breach this, a low-high of more than $1,500 per tonne is impressive.

Nickel, which had been the worst performer in 2015 as it shed more than 40% of its value, has been far stronger this year, with a year-to-date increase of 24%.

Even copper, which had trudged along in uninspiring trading, surprised as it surged higher in November, posting daily record volumes on the LME’s electronic trading platform.

Copper
– Started year at: $4,716/t
– Close as of Dec 21: $5,515/t
– Change in year to date: +16.9%
– Year-to-date high: $6,045.50/t on Nov 28 (highest since June 2015)
– YTD low: $4,318/t on January 15 (lowest since April 2009)
– YTD high/low range: $1,727.50
– On warrant material availability: +19,750t
– Highest cash/3-mth backwardation: $33 on 1 April

Aluminium
– Started year at: $1,510/t
– Close as of December 21: $1,725/t
– Change in year to date: +14.23%
– Year-to-date high: $1,794.50/t on November 16 (highest since May 2015)
– YTD low: $1,149/t on January 12 (lowest since December 1 2015)
– YTD high/low range: $645.50
– On warrant material availability: -329,600t
– Highest cash/3-mth backwardation: $22.50 on 1 March

Nickel
– Started year at: $8,800/t
– Close as of December 21 $10,830/t
– Change in year to date: +23.06%
– Year-to-date high: $11,900/t on November 28 (highest since July 2015)
– YTD low: $7,550/t on January 31 (lowest since April 2003)
– YTD high/low range: $4,350
– On warrant material availability: -33,990t
– Highest cash/3-mth backwardation: $1 on 23 September

Zinc
– Started year at: $1,570/t
– Close as of December 21: $2,620/t
– Change in year to date: +66.87%
– Year-to-date high: $2,985/t on November 28 (highest since Oct 2007)
– YTD low: $1,444.50/t on January 12 (lowest since May 2009)
– YTD high/low range: $1,540.50
– On warrant material availaibility: -69,450t
– Highest cash/3-mth backwardation: $8/t on September 1

Lead
– Started year at: $1,784/t
– Close as of December 21: $2,181/t
– Change in year to date: +22.2%
– Year-to-date high: $2,355/t on November 28 (highest since August 2011)
– YTD low: $1,588/t on January 12 (lowest since November 24, 2015)
– YTD high/low range: $767
– On warrant material availability: +70,900t
– Highest cash/3-mth backwardation: $12.75 on March 7

Tin
– Started year at: $14,570/t
– Close as of December 21: $20,905/t
– Change in year to date: +43.4%
– Year-to-date high: $22,000/t on November 7 (highest since August 2014)
– YTD low: $13,085/t on January 14 (lowest since July 2009)
– YTD high/low range: $8,915
– On warrant material availability: -2,825t
– Highest cash/3-mth backwardation: $280/t on December 1

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