• Metals prices remain well below peaks recorded earlier in the year but have been relatively range bound, fluctuating with the ebbs and flows of economic news. As usual, news relating to US Fed policy and the Chinese economy has been particularly relevant.
• In aggregate, base metal prices are 3% lower in November to date to be around 10% lower over the year. Annual price movements vary across the metals complex, but most have lost significant ground.
• Partial indicators for theUSeconomy have been mixed but are generally positive and suggest the start of US Fed tapering is near. This has generated a fair bit of volatility in metals markets as QE has been a major source of support for commodities in recent years during the malaise in physical demand. We expect tapering to commence in March, but the risk is that it will be earlier.
• Most metals markets are expected to be in (or close to) surplus 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) is expected to be relatively flat in the December quarter. Prices will recover gradually over coming quarters and into 2014.

For further analysis download the full report.

• Base Metals Market Update – November 2013 (PDF 349 KB)