Copper, tin to recover strongly in H2 11 - CommodityOnline

In terms of fundamentals, the supply side is shaping a more diverse picture across the base metals, and Barclays expect this to Lead to increasingly divergent price performances.

“We remain positive on Copper and tin, and we expect these metals to recover strongly in H2 11. In the case of copper, we forecast weak mine supply growth this year with a risk of contraction due to an array of challenges reinforced by recent widespread disruptions at facilities.”

A pick-up in Chinese imports is the catalyst needed to take prices significantly higher and the draws in bonded warehouse stocks suggest to us this is an imminent effect. Aluminium prices remain well supported from strong global demand growth, energy-led cost inflation as well as from expectations of tightening long-term energy availability. In addition, the threat to Chinese production growth from power rationing offers a further upside risk.

Macro concerns continue to dominate price action, although apparent progress in tackling the Greek debt crisis has offered the basis for a short-term relief rally across the complex.

For lead, Barclays expect the indefinite closure again of the world’s largest Lead mine, Magellan, to provide support and for Chinese conditions to firm once battery manufacturing plants are reopened.

“We are neutral on Nickel with the view that recent price weakness is overdone, but that recovering production will ease market tightness and lead to a moderate build in LME stocks. Zinc remains our least favoured metal, with continued deterioration in the fundamentals with big stock builds, a growing market surplus and sustained production growth.”