Base Metals Weekly Round-Up: Hope for Zinc and Copper

Although not all of the base metals performed well this week, analysts are confident that future industry changes will bolster prices for a few of them, at least.

Copper prices continued to struggle this week, hitting their highest point on Monday (September 30) at US$5,727 per tonne. Overall, copper prices have been on the decline since September 16, when they reached a high of US$5,876. 

This week marks the first time copper prices have dipped below the US$5,700 mark since September 23.

Although copper is underperforming, many analysts forecast that the red metal will gain traction in the coming months now that the US and China are in trade talks once again.

Some say copper will become extremely valuable in a “Greta scenario,” as more and more countries move toward decarbonization. Copper is of particular importance to electric vehicles (EVs). 

Similarly, zinc has been trending down, reaching its highest point on Tuesday (October 1) at US$2,379 per tonne and sharply decreasing over the course of the week. 

Fitch Solutions Macro Research forecasts that global zinc mine production will increase by 1.6 percent year-on-year to 13.2 million tonnes this year, before increasing to 15.7 million tonnes by 2028, averaging 1.9 percent growth a year.

Iron ore prices have remained fairly consistent over the past week, only increasing or decreasing by a few cents; the metal began the week at US$92.91 per tonne and ended the week at US$92.26. 

News from the iron ore space this week came from India, which might need to rely on global markets next year for supply of the metal as the country’s mining leases expire.

Due to delays in the auction process for leases set to expire in March, India may become reliant on imports while it is unable to produce its own materials. The expiry of mining leases would disrupt nearly a quarter of the country’s output, and would require it to import 25 million to 30 million tonnes.

Meanwhile, nickel continues to experience growth following the announced Indonesian ban on nickel exports in early September and renewed interest in EVs. Nickel started the week at US$17,560 per tonne and is finishing strong with Thursday’s (October 3) price coming in at US$17,775.

Given its momentum, analysts expect nickel to continue performing well, with expectations it will continue to grow in Q4 2019. Some analysts also expect it to stay on its current path well into 2020. 

In their September report, FocusEconomics analysts suggest nickel will average US$14,052 in Q4 2019. 

Lead has had a quiet week, starting the period at US$2,084 per tonne and finishing strong on Thursday at US$2,095, just as the weekend rolls around.

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Securities Disclosure: I, Sasha Dhesi, hold no direct investment interest in any company mentioned in this article.