• In aggregate, base metal prices fell by 4 per cent over May and were 19 per cent lower than levels one year earlier. Currently, prices for most base metals are below their May averages.
• Metals prices have been volatile as a result of events in Europe and growth concerns in China and the US. Relief from the successful Greek election was only short-lived and we expect the increased volatility in markets to persist for some time yet.
• Chinese domestic demand remained soft in May, but there were some tentative signs of improvement, or at least some stability in the economy as authorities shift their policy stance to bolster growth.
• Nevertheless, China’s economic expansion slowed further in the current quarter, weighing on end-user demand for commodities.
• Speculative demand for copper has declined sharply, with the fall more severe than the recent fall in prices, suggesting that investors are betting on further price falls due to the deepening European debt crisis. Nonetheless, supply fundamentals in the copper market remain tight, which should provide support to prices in the near to medium term.
• The NAB Base Metals Index (BMI) is expected to fall by around 7½ per cent in the June quarter. Over the remainder of 2012, prices are expected to remain close to current levels, albeit with some volatility.

For further analysis download the full report.

• Base Metals Market Update – June 2012 (PDF, 309kb)