Key takeaways from the latest Base Metals Market Tracker

Aluminium: Downside momentum maintained
The aluminium price has continued to decline, with LME cash even falling below the $1,500 per tonne mark at the start of this week. Downside pressure and momentum remains in the short term while ex-China demand plummets amid auto production line closures and while smelters resist capacity suspensions.

Copper: Fundamentally attractive
Over the course of Q2, we expect easing macro fears and an improvement in refined copper market conditions via improving demand in China and supply disruptions in the rest of the world. This should, in turn, underpin a recovery in copper prices.

Lead: Prices get some lift amid supply cuts
As auto manufacturing comes to an abrupt halt in Europe, North America and other parts of the world, demand for OEM lead-acid batteries will have been hit hard and many battery manufacturers will either have halted production in reaction to less demand, or as they close factories to help slow the spread of the Covid-19 virus. But production of lead metal is also being affected as lockdowns hit producers and the scrap collection networks. Our lead market balance forecast is under review pending further downgrades to both supply and demand.

Nickel: Quantifying the supply-side hit
Disruptions to global nickel production due to steps taken against the spread of Covid-19 amount to a substantial 113,000 tonnes of lost mined production so far. Most of these stoppages reflect measures put in place for three-to-four weeks and may well be extended. So the overall impact on the supply side of the nickel market could become increasingly significant if lockdowns are prolonged

Tin: Set to recover in Q2
After making revisions to our global supply-demand balance recently, a refined market surplus is now likely in 2020. But tin prices could rebound in the second quarter thanks to a combination of a recovery in China’s refined tin consumption and production cuts

Zinc: Larger annual surplus now projected
We have made further revisions to our supply and demand assumptions for the global zinc concentrate and refined markets this week. We now see annual surpluses in excess of 400,000 tonnes of metal in both 2020 and 2021. But with around 17% of global zinc mine capacity suspended or running at reduced rates and around a quarter operating at a loss, there is now significant potential for production to underperform in the remainder of the year, reducing the oversupply currently modelled.

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