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Copper, aluminium, zinc, nickel prices analysis

Copper price forecast news

Copper price and other industrial metals are expected to be capped next year as weak economic growth weighs on the market, a Reuters news poll showed.

The London Metal Exchange index of six base metals has inched up only 1% so far this year, held back by worries about a possible global recession and a trade war between the United States and top metals consumer China.

But the average is deceptive, because sharp gains for nickel of over 50% cover the fact that half of the metals are in the red, with losses of up to 15%.

“Unfortunately, we expect that the macroeconomic environment will deteriorate further. We expect flat copper prices in 2020, but significant downside risks persist,” said analyst Daniela Corsini at Intesa Sanpaolo Bank in Milan.

LME  copper price review news

The LME cash copper price is expected to average $6,050 a tonne in 2020, a median forecast of 29 analysts shows, a 3% increase

Analysts have become more bearish since a similar poll in July, downgrading their consensus by 6%.

Forecasts of a market deficit in 2020 have been upgraded by 12% to 191,000 tonnes, but since investors regard copper as a signpost of the global economy, only severe shortages would lift the price amid a weak economic outlook, analysts say.


The nickel price has been the best performer so far this year with 59% gains, spiking after top producer Indonesia brought forward a ban on ore exports by two years to Jan. 1.

But prices have largely absorbed the bullish news and aside from possible short-term spikes due to speculative moves are unlikely to settle higher next year, analysts said.

“The impact of the ore ban won’t really be felt until the second half of next year, and the reason for that is the Indonesian government has given ore exporters four months’ notice of the ban,” said analyst Jim Lennon at Macquarie.

Indonesian exporters are due to ship out an additional 80,000-100,000 tonnes of contained nickel before the end of the year, keeping Chinese producers well supplied during the first half of 2020, Lennon added.

The LME cash price of nickel, mainly used to make stainless steel, is expected to average $16,500 a tonne next year, down 2% from the current price.

The market deficit is expected at 30,000 tonnes next year, a rise from 26,000 tonnes forecast for 2019, according to the poll, but still minimal when compared to 144,000 tonnes in 2018, according to the International Nickel Study Group.


Aluminium prices will see only modest growth next year as the market moves into a surplus, hit by a combination of a pullback in demand growth and continued gains in supply.

Current demand downturn has the misfortune of being timed with the start of the strongest period for ex-China supply growth since the late 1990s,” said analyst Nicholas Snowdon at Deutsche Bank in London.

“The story for 2020 is likely to be about the pace at which smelter cuts emerge to balance demand trends.”

Global market news is due to flip into a surplus of 304,000 tonnes next year from a deficit of 658,500 tonnes in 2019, according to the consensus numbers.

However In the last poll in July, analysts had expected a deficit of 88,000 tonnes next year.

Analysts expect cash LME aluminium to average $1,814 a tonne in 2020, up 6% from the current price.


Zinc is also expected to move into surplus next year as rising mine production is smelted into metal after bottlenecks had blocked ore processing over the past few years.

“We expect the 2020 zinc market be in a material surplus on the back of still moderate demand growth and strong growth in Chinese refined production,” said Mikhail Sprogis at Goldman Sachs.

Therefore Zinc, mainly used for galvanising in the steel industry, is expected to see a surplus of 158,000 tonnes in 2020 after a deficit of 50,500 tonnes this year, the poll consensus showed.

Analysts have shaved their 2020 forecast for cash LME zinc by 4% since the last poll to $2,315 a tonne, down 9% from the latest price.

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