Aluminium: China’s stimulus plan to support demand in 2019
What key trends did you see in the aluminium market in 2018?
Prices for aluminium have been on a largely downward trend in 2018, interrupted only by a sharp and short-lived upturn in April. U.S. sanctions on Russian aluminum giant, Rusal, one of the biggest producers worldwide, drove up prices to a multi-year high on 18 April. However, the delayed imposition of the sanctions and increasing likelihood that Rusal will avoid measures altogether have cut fears of supply shortages and staved off upward price pressures. Moreover, China’s slowing growth, exacerbated by the tit-for-tat trade war with the U.S., has seen demand for the metal weaken. The resulting supply-demand dynamics have pushed down prices.
What key trends do you predict for the aluminium market in 2019?
Aluminium prices are expected to recover somewhat next year, as China’s stimulus plan supports demand for the metal. Price gains will be likely be limited, however, due to ample supply. As of our November edition, FocusEconomics sees aluminium prices averaging USD 2,146 per metric ton in Q4 2019.
– Economist Nihad Ahmed
Tin: Mid-term outlook for prices remains bright
Key trends over 2018
Tin has had a challenging 2018 so far, with the price of the metal down nearly 10% on a year-to-date basis at the end of November. A marked increase in tin supply in the first nine months of the year by the world’s largest exporter—Indonesia—has weighed on the price of the metal. This was only partly offset by a downturn in tin production in China, which remains the world’s largest consumer of the metal, as well as by falling exports of tin from Myanmar. In addition, softer growth dynamics in China this year, in part due to the ongoing and intensifying trade war with the U.S. has taken a toll on Chinese manufacturing growth and weighed on demand for the metal.
Trends to watch for in 2019
Looking ahead, despite ongoing trade tensions and the associated cooling in Chinese demand, the mid-term outlook for tin prices remains bright. Favorable demand prospects stemming from the metal’s usability in new technologies such as electric vehicles, robotics and renewable energy, as well as limited tin supply—partly due to expected output cuts across some of the major tin producers—should more than offset any downward pressures to prices due to ongoing global trade tensions and a slowdown in the Chinese economy. FocusEconomics panelists see the price of tin averaging USD 20,155 per metric ton in Q4 2019 as of our November Commodities report.
– Economist Almanas Stanapedis
Coal: Demand from Asia expected to cool in 2019
Key trends over 2018
Over late spring and the summer, prices for thermal coal—which is used as an energy source for air conditioning and industrial cooling—rose on supply-chain concerns and unseasonably hot weather across Asia and Europe. Simultaneously, however, the Chinese government continued its crackdown on polluting industries and prices have consequently been on a general downwards trajectory since late August.
Trends to watch for in 2019
Demand from Asia—particularly China and Japan—is expected to cool next year, in part due to the multi-year high level of thermal coal prices and in part due to a move towards cleaner energy sources.
– Economist Jan Lammersen
Silver: Industrial demand to remain robust in 2019
Key trends over 2018
Silver prices were depressed overall over the course of 2018. This was primarily the result of a surplus market due to recovering mining production. Meanwhile, weaker purchasing of jewelry, coins, and bars—coupled with impressive gains in stock markets—subdued demand dynamics in comparison to 2017, despite a strong industrial market.
Trends to watch for in 2019
Next year, industrial demand in the automotive and electronics sectors should remain robust, which should in turn support a rise in silver prices following a disappointing 2017. Risks include global trade tensions, higher global interest rates and the possibility of slower-than-expected growth in China.
Companies to watch in the silver market in 2019
Keep an eye on Fresnillo, the world’s largest silver producer. This year the company has been troubled with lower-than-expected output and has downgraded its 2018 full-year production forecasts twice, most recently following weaker production in the third quarter. More concerning for their outlook is heightened uncertainty over the impact of newly-elected Mexican President Andrés Manuel López Obrador (AMLO), after several bills were recently put forth by Mexican legislators that could require indigenous communities’ consent on future mining concessions and would allow the Ministry of Economy to retract current mining permits that are having a negative social impact. This move led Morgan Stanley to cut its rating for the company’s stock on 22 November.
– Economist Lindsey Ice
Platinum: Decline in diesel vehicle sales to dampen prices in 2019
Trends to watch for in 2019
Platinum has had a soft 2018, largely on the back of drooping demand for diesel vehicles—which require platinum—and a substantial market surplus of the commodity, even though global production is expected to decline from 2017. Meanwhile, prices for sister metal palladium surged, which will have been particularly galling for platinum investors.
Companies to watch in the silver market in 2019
Although supply should pick up slightly on higher output from North America, while demand is also set to rise, the ongoing decline in sales of diesel vehicles will dampen any increase in prices. The upshot is that the supply overhang should gradually narrow, which will be positive for prices. Our panelists currently see platinum prices at USD 928 per troy ounce in Q4 2019.
– Economist Oliver Reynolds