Analysts at TDS expect that certain metals will outperform their peers, as the respective markets tighten while scarce inventories along with firm demand precipitate deficits.
“Zinc and lead are the top contenders for prime performance in the first half of the year, while copper, aluminium and nickel may benefit from positive correlations to the rallying complex. Their performance should lag that of their peers however, as their well supplied market and bloated inventories keep the physical market well supplied, capping rallies into next year.”
“Strong global demand and voluntary mine production cuts are depleting zinc inventories, which should fall to near critical levels into 2019. That being said, signs have emerged that previously shuttered mines may resume production, which should provide the market with some metal after the second half of the year — although we do note that any increase in production should remain gradual, as to not disrupt the market.”
“Although invisible stocks may provide the market with some shortterm relief, as extreme backwardations incentivize metal holders to place the metal on warrant, the market is still set to tighten considerably into the first half of the year. As a result, we expect prices to be supported higher to a quarterly average of $3,350/t. Zinc's sister metal, lead, should perform well for similar reasons.”
“At the same time, the recently “electrified” nickel demand expectations amid electric vehicle optimism have sent prices surging to levels not seen since 2015. But, with indications that supplies from the Philippines are returning — subject to government approval, as the mining commission has reportedly voted on lifting the ban on open-pit mining — and Indonesia increasing its export permit allowance, we expect that physical demand for the metal will remain well covered. Furthermore, a massive store of above ground inventories in warehouses totaling some 225 days of consumption will be another source of supply preventing a tightening in the nickel market.”
“And, while we join the market in our long-term optimism with regards to the electrification trend, the rising briquette stocks – which is the product type most suited for battery materials – seem to suggest that demand from EVs will not add any material pressure on market balances for a while yet.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.