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London — Base metals, notably copper, nickel and zinc, could be due a solid move higher basis solid fundamentals, the CEO of Eurasian Resources said Thursday.
According to the diversified miner's view, "market fundamentals indicate strong conditions in the physical market as evidenced by heavy destocking -- in copper, nickel, aluminium, zinc and steel -- and rising physical premiums."
However, for nickel this contradicts what S&P Global Platts has been hearing of late, with nickel briquette premiums lowered last week and unchanged this week.
European nickel briquette premiums were heard under pressure last week, in the face of ample supply and lower demand, with the ongoing electric vehicle story failing to boost sentiment following the annual LME Week gathering in London.
Briquette premiums, basis in-warehouse Rotterdam, had been steady at a midpoint of $250/mt, plus LME cash, since September 7.
Before that, they were assessed at $275/mt, same basis, for around two months. Briquettes started the year at $310/mt IW Rotterdam. Platts lowered its IW Rotterdam assessment to $210-$230/mt from $240-$260/mt last week. That gave a mid-point of $220/mt from $250/mt.
Premiums this week were assessed unchanged.
Benedikt Sobotka, CEO of Eurasian Resources said in a statement Thursday: "Metal prices, which weakened significantly over the summer, do not accurately reflect underlying fundamentals ... with evidence of physical shortages and increasing signs that growth in demand is likely to accelerate in China, the final building blocks for a strong metals recovery into the year-end are falling into place."
Looking at copper, Sobotka said the company is increasing its China copper demand outlook for 2018 to over 5%, "and anticipate that prices will recover before the end of the year ... Next year, we expect prices to be supported further as supply struggles to keep pace with continued healthy demand. The increased likelihood of smelter disruptions and continuing distortions to global scrap flows were key issues discussed in London, which gives us confidence in our positive price outlook."
Copper stocks in LME-registered sheds continued to decline at last count, down 2,650 mt at 149,575 mt. "LME on-warrant stocks fell 9,000 mt to 72,600 mt, marking a fresh low not seen since 2005," Marex said in a research note Thursday. COMEX copper futures edged lower Wednesday in European and North American trade following an overnight run-up in Asia.
Copper for December delivery, the active month, closed 0.05 cents/lb lower at 275.75 cents/lb after rocketing in overnight Asian trading to the 280 cents/lb level, but giving back its gains in European and US trading.
But the market once again found strong support at the 274-275 cents/lb range throughout the New York session. During premarket trade Monday, three-month LME copper was spot bid $28 firmer at $6,206/mt, basis LMEselect (timestamp 0945 GMT).
Spot import offers for LME-registered brands of copper cathodes, basis delivered China main ports, stayed weak amid lackluster trades as arbitrage opportunities thinned out, industry sources said Wednesday. Platts assessed the weekly CFR China copper premium at $85-$105/mt Wednesday, down from $90-$110/mt last week.
EV DEMAND LIKELY TO LEND SUPPORT TO COBALT
"The global shift towards EVs and battery energy storage means cobalt remains a widely discussed commodity, and this was no different at this year's LME Week. While overall passenger vehicle sales have fallen in recent months, the sale of EVs continues to grow at staggering rates," Sobotka said.
There has been much discussion around creating batteries that are less cobalt heavy, to counter the increased price of the metal. Still, Sobotka was less than convinced. "The anticipated shift to low-cobalt batteries is proving more costly and technologically challenging than expected," he said.
He was also bullish on tight supply of the metal going forward, on the back of a variety of factors.
"The cobalt market is undergoing a seismic shift in demand and supply will struggle to keep pace. When it comes to sourcing cobalt, artisanal mining practices are now responsible for more than 25% of mined cobalt globally while pressure to source the material responsibly is mounting. Ethical suppliers are well-placed to gain from this trend," he said.