Base Metals Price Outlook Economic Forecast

Base Metals Price Outlook

Optimism and fundamentals drive outlook

Industrial metals prices continued to post solid gains toward the end of 2016. In Q4, base metals prices increased 15.4% annually and the rally in most categories was supported by stronger demand, a pull-back in investment by major mining companies and ongoing reform in China to reduce excess capacity. Industrial metals prices received an additional push in the aftermath of the U.S. election as investors foresaw Trump’s infrastructure program boosting demand.

The rally in copper came well before the U.S. election. Prices started to increase during LME Week in London beginning on 31 October—the annual meeting of the base metals markets at the end of October—and, although fundamentals were not fundamentally changed, investors’ sentiment about the outlook was not as bad as it had been. In 2016, disruptions were somewhat frequent and ongoing capacity closures at the beginning of this year in China provided further support to prices. Meanwhile, adherence to new environmental laws in the Philippines put nearly a quarter of the world’s nickel mine supply and the only major supplier to the Chinese pig iron industry at risk. This, along with strong demand from China, prompted nickel prices to surge in the final quarter of 2016. While it is unlikely that the Philippine nickel industry will completely shut down, the amount of the supply source that is at risk warrants a substantial premium, which will continue to push prices up. Iron ore prices saw a strong rebound in Q4 2016, sustained by a combination of robust steel demand from China and supply disruptions.

The outlook for most industrial metals in 2017 remains positive as the optimism seen in Q4 2016 will persist through H1 2017, reflecting the gradual tightening of the markets. But China’s transition to a consumption-led economy, together with industrial reform and environmental concerns, is likely to slow demand for raw materials and keep prices more sluggish toward the end of this year and through 2018. Following a rebound in the final quarter of 2016, base metals prices are expected to continue rising strongly during the first half of this year and to moderate toward the end of the year. Analysts expect prices to increase just 1.4% annually in Q4 2017 and 1.5% in Q4 2018. 

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Base Metals Historical Price Data

2011  2012  2013  2014  2015  
Aluminium2400.89  2020.88  1845.86  1867.48  1663.69  
Aluminium Alloy2268.65  1935.97  1797.84  1950.43  1720.53  
Alumina471.82  433.69  426.39  421.3  387.42  
Copper8820.11  7954.23  7330.44  6863.26  5508.57  
Nickel22873.86  17522.38  15022.53  16897.92  11834.73  
Lead2398.09  2062.45  2139.23  2095  1787.3  
Zinc2192.79  1948.16  1910.09  2162.01  1929.03  
Tin26005.64  21099.76  22272.66  21878.75  16053.44  
Iron Ore140.7  131.83  136.58  97.34  55.82  
Steel (USA)745.89  656.57  630.49  657.79  462.25  
Steel (Europe)776.74  659.47  614.28  568.37  420.18  

Note:
Aluminium prices in USD per metric ton (mt).
Alluminum Alloy prices in USD per metric ton (mt).
Alumina prices in USD per metric ton (mt).
Copper prices in USD per metric ton (mt).
Nickel prices in USD per metric ton (mt).
Lead prices in USD per metric ton (mt).
Zinc prices in USD per metric ton (mt).
Tin prices in USD per metric ton (mt).
Iron ore prices in USD per metric ton (mt).
Steel (USA) prices in USD per metric ton (mt).
Steel (Europe) prices in USD per metric ton (mt).
All prices are average of period (aop).

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Price forecasts and historical data for Energy, Metals and Agricultural Commodities

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