RESEARCH: Key takeaways from the latest Base Metals Market Tracker

The latest forecasts from Fastmarkets’ team of analysts are ready to view.

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.

Click here to view the Base Metals Market Tracker in full. If you are not a subscriber but would like see a free sample report, please click here.

What to read next
Conversations and panel discussions at the Institute of Scrap Recycling Industries Roundtables in Chicago on September 14-16 largely centered around market uncertainty and navigating complex geopolitical landscapes during a time of energy transition and low domestic demand
Eagle Metals Inc is looking to diversify its copper and stainless steel supply chains in the face of soaring energy costs and rising demand, which could create supply deficits, according to the specialty reroll mill’s top executive
Base metals prices on the London Metal Exchange were mostly lower during morning trading on Monday September 26, with the strong dollar and demand concerns still weighing on the market
Following market feedback on the discrepancy between machine shop turnings and other ferrous scrap grades in the Houston dealer selling market, Fastmarkets proposes a realignment of the remaining grades in Houston, effective from the October 2022 monthly settlement.
Mixed near-term demand and stagnant prices could place US buyers at an advantage during this year’s steel HRC trading season
Key talking points at Fastmarkets’ International Aluminium conference, held in Barcelona, Spain, on September 12-15
We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.