Aluminium: 4-million-tonne surplus for 2020
We have made further downward revisions to our aluminium demand expectations for 2020 and, although there have been smelter capacity reduction in China too, the net effect is that our forecast for the global surplus this year has swelled to 4 million tonnes, from 2.7 million tonnes previously. We have lowered our price forecasts this week too.
Copper: Some light at the end of the tunnel
Copper has rebounded well since the start of the second quarter after a terrible performance in the first quarter. While the present macro picture is acutely weak due to the Covid-19 crisis, we do see some light at the end of the tunnel, especially in China, which has reopened its economy. This could lead to stronger refined copper demand conditions, which – together with substantial supply disruptions – could trigger further short-covering in the near term. That said, we contend that volatility is here to stay due to heightened macro uncertainty.
Lead: 325,000-tonne surplus this year
Lockdowns of non-essential businesses around the world are having a major impact on the collection of spent lead-acid batteries. With recycling such a large part of the refined lead supply chain, total lead supply may be more negatively affected by virus-related restrictions than supply of other base metals. This will help offset weak lead demand in the weeks and months ahead. But, overall, we still see virus-related demand losses outweighing supply losses. We forecast a 325,000-tonne global surplus this year, up more than three-fold from the surplus we were forecasting at the start of the year.
Nickel: Supply disruptions growing
We estimate that restrictions and disruptions related to the Covid-19 crisis will cost the nickel industry 126,000 tonnes of lost production in 2020 – a figure that may well rise further in the coming weeks. This is helping to support the price rebound.
Tin: Possible price recovery in Q2
Despite the weak macro picture, tin is off to a good start to the second quarter alongside its peers, consistent with the elevated level in cross-correlations among the base metals. Tin’s fundamentals have been relatively resilient in the face of the Covid-19 crisis. Recent supply disruptions could temporarily tighten the refined tin market and push tin prices higher in the course of this quarter.
Zinc: More producer restraint needed
While we have trimmed our forecast for zinc production this week due to growing supply disruptions, we are still projecting a global surplus in the region of 400,000 tonnes in 2020. The risk of further production cuts have increased alongside extended quarantine restrictions in key zinc-producing nations, but we maintain that there are still downside price risks in the second quarter without further restraint among producers.
