Base Metals Base Metals Commodities Prices February 2018

Base Metals: Base Metals Price Outlook

February 14, 2018

Signs of strong global economic growth for 2018 boosts prices at the start of the year


Prices for base metals rebounded in January to a 5.1% month-on-month expansion (December: -0.4% mom) as economic indicators for China, the main consumer of base metals, signaled that the economy is still growing at a healthy pace. Economic growth remains buoyant in other key economies such as the Euro area and the United States, while dynamics in emerging-market countries are also improving. Moreover, mining investment remains relatively low, suggesting that supply will be contained in the mid- and long-term.


Nickel prices led the surge in base metal prices due to robust demand from China’s stainless-steel industry and stronger demand from the Asian giant as stricter environmental regulations decreased capacity in the country. The long rally in zinc prices continued in January on the back of strong demand and constrained supply, while tin prices were underpinned by inventory draws. Alumina recorded the only month-on-month drop in prices as China reduced imports in recent months on low domestic prices.


Base metal prices are expected to decrease slightly by the end of this year, following two years of strong gains, on slower growth in China. Analysts see base metal prices falling 0.4% in Q4 2018 from the same quarter in 2017. Base metal prices should pick up again in 2019 following this year’s consolidation, rising 3.1% year-on-year in Q4 2019


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