By Carolina Curiel (ScrapMonster Author)
May 25, 2016 08:38:08 PM
EDGWARE (Scrap Monster): Sucden
Financial has released the Analysis and Forecast Report on precious and base
metals for Q2 this year. The ‘Sucden Financial Metals Report-April 2016’ covers
all metals including Zinc, Nickel, Copper, Lead and Aluminum.
According to the report, initial quarter of the year remained bearish, mainly on the back of fears that Chinese economy is slowing down at a faster pace than anticipated. Fears of weak Chinese demand hit commodity prices hard. Going forward, global economy is likely to improve, but may have to face numerous headwinds. The metals having stronger fundamentals are likely to witness stronger rallies.
The zinc prices started the year on a weak note. The prices have rallied sharply by 32% since hitting the lows of $1,444.50 per tonne during mid-January. The zinc prices are expected to remain in a bull market during Q2. The prices are likely to range between $1,725 per tonne and $1,925 per tonne during Q2. The report predicts the average price for 2016 at $1,800 per tonne.
Nickel, after tumbling 42% in 2015, fell another 3.7% during the first quarter of 2016. The prices hit a low of $7,580 per tonne in February. Although it has witnessed a late rally in February, the fundamentals continue to remain weak for the metal. During Q2, benefits on account of the planned production cuts and rise in demand are likely to be offset by exceedingly high inventory levels. The metal will continue to remain range-bound between $8,000 and $9,500 per tonne during Q2. Moderate recovery in global stainless steel production is likely to reduce downward pressure on nickel.
The report notes that freefall in copper prices has come to an end. The prices have started rebounding sharply since mid-January this year. The prices have rebounded by almost 18.8%. The low LME stock levels and rallying prices may trigger restocking of the metal. The prices are likely to consolidate and form a base around $4,700 per tonne during the second quarter of the year. However, the report foresees selling pressure as the prices approach $5,200 per tonne. Supply disruptions and production cuts may limit output growth to 1% during the entire year 2016. The report predicts global copper demand growth at 2%.
The lead prices are in an attempt to form a base. The supply fundamentals remain strong for the metal. The low LME and SHFE lead inventory levels and rising demand from auto and industrial battery markets presents bright prospects for the metal. According to ILZSG data, lead market had turned to supply deficit in January this year. Sucden Financial expects the deficit to rise further during the year. The prices are likely to range between $1,650 and $1,950 per tonne during Q2 this year. For the whole year 2016, the prices are likely to average around $1,800 per tonne.
The aluminum prices have staged a strong recovery from $1,432.50 per tonne recorded during November last year to as high as $1,605 per tonne. The 12% rally in prices is comparatively weaker when compared with the average price recovery of over 26% in other base metals. Meantime, Chinese aluminum prices rallied 26%. The anticipated production increases is likely to keep aluminum market well-supplied, thereby capping further rise in prices. The report predicts the prices to trend sideways in the range $1,440 to $1,600 per tonne. For the whole year 2016, the average prices are likely to be around $1,500 per tonne. With global aluminum inventory at extremely high levels, the overall trend is likely to remain downward unless a strong economic recovery happens.