Base Metals Market Update – March 2014

Prices for most industrial metals have moved lower in response to growth concerns in China and uncertainty over the unwinding of commodity financing deals. However, supply side events are supporting prices for Nickel in particular.

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  • Prices for most industrial metals have moved lower in response to growth concerns in China and uncertainty over the unwinding of commodity financing deals. However, supply side events are supporting prices for Nickel in particular.
  • In aggregate, base metal prices are 1% lower in March to date to be around 9% lower over the year. Annual price movements vary across the metals complex, but most have lost significant ground.
  • Partial indicators for the Chinese economy have generally been soft, while recent debt defaults have heightened concerns over the economy. However, there is growing anticipation in the market for potential stimulus measures in China. The US economic recovery experienced a set back, largely due to adverse weather, but is expected to get back on track over 2014 – tapering to conclude by year end.
  • Most metals market balances are expected to loosen in 2013/14, as increasing metal supplies outpace the gradual improvement in demand. These market fundamentals are likely to limit price increases as the global economy improves.
  • The NAB Base Metals Index (BMI) rose modestly in the March quarter. Prices are expected to be relatively flat over 2014 before rising modestly next year.

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