• Metals prices remain well below peaks recorded earlier in the year but have seen some support recently from more upbeat economic data, particularly from the large advanced economies, although China is showing early signs of stabilising as well.
• In aggregate, base metal prices are 4% higher in August to date to be around 2% lower over the year. Annual price movements vary across the metals complex.
• With growth in the US gradually recovering in line with our expectations, it appears likely that the US Fed will begin to taper its asset purchasing program soon, removing support from commodity markets over coming months. We expect tapering to commence in September but this will be data dependent.
• Metals markets will be in surplus in 2013, as a result of increasing metal supplies and slower anticipated demand growth. This shift in market fundamentals combined with elevated inventory levels, will keep metals prices susceptible to any negative demand side shocks.
• The NAB Base Metals Index (BMI) is expected to decline by around 1¼% in the September quarter. Prices will recover gradually later in the year and into 2014.

For further analysis download the full report.

• Base Metals Market Update – August 2013 (PDF 334 KB )