Watch the full video interview, which was recorded in early August 2022, or read the key takeaways below.

Have lithium prices stopped rising? Have we seen a peak for now?

Yes, we have for the moment. The reason for the pull back is associated with the Covid-19 lockdowns in China. With factories closed, there have been stock production issues. There have also been parts shortages for semiconductors in Europe and the US. Constraints on production mean that there is currently not as much upward pressure on prices.

However, lithium supply is still very strong and waiting lists for electric vehicles (EVs) are currently anywhere from three months to two years, with the majority waiting six to 12 months, so there is a lot of pent-up demand.

Fastmarkets’ prediction is that once we see China coming out of lockdowns, the parts shortage should ease, and prices will start to pick up again. Although prices have pulled back and we have seen some ‘destocking’ as demand picks up, we’re inevitably going to see some ‘restocking’ which will put pressure on prices again. We are expecting that the peak will likely be at the end of this year or the beginning of 2023.

The outlook for the lithium market is polarized. Where does Fastmarkets stand and why?

We expect the market to remain tight. Extra supply is on the way, and we are seeing this already with expansions coming through with restarts of idle capacity. At the end of this year and the beginning of next year, we will see new production. This will alleviate tightness, but the market will still be tight and extra supply will be well absorbed by the market. There is strong demand out there and restocking is expected. As the downstream supply chain is growing so fast, we need to build up working stock too. Given the price rises predicted, we will likely see some strategic buying.

Those who are seeing an oversupply situation might be looking at supply and demand numbers and taking them at face value but supply rarely comes on smoothly and often there will be ‘ramp-up’ issues. It is also difficult to get the right grades to start with. All new materials also need to be qualified and this can take six to 18 months. New supply is on the way, it can take time to reach the capacity levels that people have down on paper. In essence, the market will remain tight.

What can the market do to ensure there will be enough supply to satisfy demand?

The market needs high prices to incentivize new investment. But there is more to it than that. You need local and central government support for projects. You need permits for environmental considerations and water. You also need the support of local communities as there can often be opposition to new projects so all this can take time. Good ESG credentials can also take time to work through. To bring a new greenfield project to fruition can take five to 15 years. Money is one factor but there are lots of other considerations.

In essence, there needs to be enough supply onstream in a timely manner.

Keep up to date with the latest news and insights in the lithium market by visiting our dedicated lithium page.

The post Will Adams on the lithium price peak and what the future holds for the lithium supply/demand balance appeared first on Fastmarkets.

Supply-side concerns, however, have also yet to be resolved, with logistical issues and high container costs for material from both Africa and China supporting prices, while news that graphite production in Heilongjiang province is due to resume at more normal levels was offset by news that environmental inspection teams are halting operations in Luobei county from May 18.

Price remains unchanged

Amid strong underlying fundamentals, and with offsetting supply and demand factors, Fastmarkets’ graphite price assessments remain unchanged. Graphite flake 94%C, -100 mesh, fob China remains at $830 per tonne, with graphite spherical 99.95%C, 15 microns, fob China at 3,500-3,800 per tonne. European prices are also steady with graphite flake 94%C, +100 mesh, cif Europe at $1,400 per tonne.

China graphite prices

Amorphous graphite prices surged amid a recovery in demand from downstream steel producers, with mills switching to amorphous graphite as a replacement for anthracite and pet-coke.

Flake graphite prices were unchanged but tightness has eased with the ending of seasonal winter stoppages in Heilongjiang and amid low liquidity in the refractories sector.

Supply concerns continued with environmental inspection teams halting operations in Luobei county from May 18.

Spherical graphite prices remained stable on sound demand from the anode sector.

European graphite market

Tight supply from China and rising global logistics costs drove the amorphous graphite market to a new multi-year high.

Graphite importers seeking to save money using breakbulk transportation have found that the savings compared with shipping in containers have narrowed to as little as $50 per tonne.

Logistics problems for shipping from Africa have continued, with market participants reporting high costs for containers, around $6,000 per container, and delivery times of two months.

Anode production rises to meet EV battery demand

Chinese anode production is rising rapidly to meet surging demand from the EV battery sector, with impressive growth evident in early 2022, following strong advances in 2021. According to data from ICCSino, Chinese anode production exceeded 90,000 tonnes in March 2022, with production in Q1 2022 reaching 251,000 tonnes, up 81% year-on-year from 139,000 tonnes in Q1 2021. After nearly doubling in 2021 to 677,000 tonnes in 2021, Fastmarkets is forecasting Chinese anode production to exceed 1m tonnes in 2022.

Impressive growth in anode production in China both in 2022 and in the coming years will keep graphite prices, particularly spherical graphite and fine flake graphite prices, elevated this year and through 2025 at a minimum, given delays to new junior miner graphite projects as well as issues affecting synthetic graphite supply including environmental concerns, rising costs, and a shortage of graphitization capacity.

While near-term downside risks to pricing remain, reflecting temporarily reduced demand in China in response to Covid-19 lockdowns and the potential increase in graphite production in the Heilongjiang region, as well as concerns regarding the Ukraine-Russia war, we maintain the view that graphite prices will remain on an upward trajectory for the majority of 2022.

To stay up-to-date with the dynamics shaping the graphite market, visit our dedicated graphite market page for more news and insights.

The post Graphite prices show resilience amid growing demand-side concerns appeared first on Fastmarkets.

Aluminium: More supply disruptions

The bullish narrative around aluminium centers on heightened supply disruption risks in the face of the Russia-Ukraine war, sanctions on Russia and high energy prices in Europe. In the past few weeks, news flow has emboldened the aluminium bulls, first with Australia’s ban on alumina exports to Russia and then, most recently, with German smelter Trimet joining the list of European peers forced to reduce output.

The global aluminium market was already heading for an enormous supply deficit this year, and developments like these only widen the supply-demand imbalance. The outlook for prices is still bullish, especially as long as sanctions on Russia remain in place and continue to disrupt flows of aluminium, its raw materials and energy.

Copper: Price recovery likely to continue

Copper prices have recovered well from their local low on March 16. This corroborates our view that the sell-off earlier in the month was induced by liquidity issues rather than a negative change in the fundamentals. In fact, we continue to view the refined copper market as meaningfully tight and expect traders to resume their long position building.

Meanwhile, any price decline below $10,000 per tonne should attract dip buyers, as was the case earlier this month. In the current environment, volatility in the copper market is here to stay, but we remain convinced that copper prices should trade well above their current levels over a 12-month horizon.

You might also like:

• Base metals’ fundamental backdrop to remain healthy in year ahead: 2022 preview
• Ukraine war prompts Chinese traders to eye base metals exports
• Ukraine crisis drives rush to secure supply in global metal markets

Lead: Price may consolidate next

As expected, lead prices put in a stronger performance last week, ending back above $2,300 per tonne. Winter is typically a strong period for replacement battery demand. But given that winter is turning to spring in the northern hemisphere, and OEM battery demand will be affected by disruptions faced by automakers, lead prices could be seen as relatively elevated from this seasonal fundamental perspective.

We would not be surprised to see lead’s price performance soften in the weeks ahead. This is in line with the sideways pattern of Q2 2021 and our base case cash price forecast for Q2 2022, which remains unchanged this week.

Nickel: Trying to find its level around $30,000/tonne

Nickel prices remain volatile, with the focus of trading around the $30,000-per-tonne level. We reiterate that our price forecasts beyond the short-term, technically-driven correction, remain unchanged and continue to be grounded in nickel’s fundamentals, which still look strong.

We still forecast a global supply deficit of 93,000 tonnes this year, which means there is fresh upside potential for prices once the dust has settled over the short squeeze shock.

Tin: Consolidation continues

Tin prices have continued to trade sideways since their steep sell-off on March 9. This looks normal after the outsized price gains earlier in the year.

Fundamentally, the global refined tin market remains tight, which should keep prices elevated. Although metal availability should improve due to the resumption of Indonesian tin exports, most of the material will be sucked into China, keeping the global market tight. Against this, we expect tin prices to retest their all-time high in the coming months.

Zinc: Demand outlook revised, but deficit still stands

We have reduced our zinc demand outlook for Europe this week due to the automobile and galvanizing steel industries’ supply chain links with Russia and Ukraine. As a result, the global refined zinc market deficit for 2022 has fallen by around 50,000 tonnes. But at 193,000 tonnes, the projected supply shortfall this year is still meaningful and continues to support a bullish outlook for zinc prices.

The post Base metals: Behind all the volatility, the fundamentals are still robust appeared first on Fastmarkets.

To listen to the webinar in full, you can access the recording here.

Prices are elevated but don’t expect them to move much higher

Senior price reporter Dalila Ouerghi said that cobalt hydroxide – particularly the market in Asia – has seen prices remain at an elevated level at the beginning of 2022. When speaking directly with buyers, Ouerghi noted that they are buying “hand to mouth” and – because the availability of the downstream product in China is a concern – that it is better to pay the rising price sooner than later.

As operations start to pick up again in the post-Covid recovery, we are starting to see more supply come onstream. This means that, while demand is strong and prices have moved up further than expected, they shouldn’t move much higher.

The key drivers of demand and price for the year relate directly to the energy transition

The key drivers were identified as follows:

• Continued strong growth in demand and market share for electric vehicles (EV)
• The build-up of energy storage systems
• Some recovery for those in the consumer electronics industry suffering as a result of semiconductor shortages
• Expectations of an increase in demand from aerospace in the medium term

While automakers might be looking to reduce the amount of cobalt in their batteries, it will not completely disappear

When it comes to battery cells, we are starting to see higher nickel and less cobalt, which will take some pressure off the market. We know that roughly 70% of the mined cobalt comes from the Democratic Republic of Congo (DRC) – where there are still supply and reputational risks for manufacturers – and 70% of cobalt processing occurs in China. This means a lack of diversity in the supply chain for automakers and battery makers relying on these two links in the supply chain.

Even if we see a reduction in cobalt, however, it will not disappear completely. This is because it is a stabilizer in batteries, so though it will not be used in certain EV models there will still be demand.

Trends for the exchange will follow the real world and physical market

When asked what trends the CME expected to see in 2022, Gregor Spilker said that, while it was hard to tell what sectors they expected to grow in contracts, the exchange did tend to follow what was happening in the real world.

“You can’t ignore how the EV market is growing. This creates more risk, as well as more value, and this risk needs to be transferred between buyer and seller,” said Spilker. “This is where the CME comes in.”

The CME can offer forward price risk management that enables you to lock in prices up to three years in advance.

Find out more about the derivatives contracts available with the CME here.

We will see the market for cobalt recycling continue to grow

While there has always been a market for recycling cobalt, now that we’re seeing high prices again there is an even greater need and want for it. This will help to mitigate supply restraints. As we see more recycling come in, there will be less reliance on the DRC as more local supply is available – as an example.

“Batteries need to become part of a circular economy,” said Will Adams. “At the moment, a lot of the recycled cobalt is coming from consumer products, but more will come from the EV market as cars come to the end of their lives and the need for recycling grows.”

Logistics and shipping disruptions will continue through the remainder of 2022

There are logistics and shipping disruptions from 2021 that have carried over into this year. These include the movement of cobalt hydroxide from South Africa to China, as well as the movement of cobalt from the DRC to South Africa.

“The main issue remaining is a lack of container space,” says Ouerghi, “with a backlog of 2-3 months of materials. When I speak with buyers who are selling hydroxide now at a fixed payable or spot basis, it would mean shipping in April. There could be delays and cancellations. This is something we will continue to experience through the remainder of 2022.”

If you’d like to listen to the webinar in full, you can access the recording here.

To keep up with these cobalt trends and what’s happening in the battery raw materials market throughout 2022, visit our battery raw materials page.

The post Six key factors driving the cobalt market in 2022 appeared first on Fastmarkets.

Production of NEVs in China climbed to 457,000 units in November, up by 15.1% month on month and up by 127.8% year on year. The closing months of the year tend to witness strong sales growth.

From January to November, the country’s NEV sales totaled 2.99 million units, up by 166.8% from the same period last year. The total sales for the year will be above three million units, one million units higher than the market originally expected.

NEV sales accounted for around 17.8% of total new vehicle sales in November, while it was only 5% for the whole year in 2020. For plug-in EVs, the sales accounted for 19.5% of new passenger vehicles in November. In the first eleven months of 2021, NEV sales accounted for 12.9% of all new vehicle sales. We expect the NEV sales share of total new vehicle sales to exceed 20% in 2022.

The total volume of NEV production in January-November was 3.023 million units, up by 167.4% from a year earlier.

We have reviewed our supply and demand numbers and forecasts to account for the rapid pace of growth in electric vehicles (EV) and energy storage (ESS) seen this year. In addition, demand will grow at a faster pace than consumption as downstream manufacturers will need to increase the amount of working stock they hold as they increase their production capacity.

EV sales have been spectacular so far this year. In the January to October period, sales have grown by 189% in China, 157% in Europe (Jan-September pro rata) and by 94% in the US. While these numbers are to some extent high due to the sluggish sales in the first two quarters of 2020 due to Covid-19, they are in their own right very high, particularly in China and Europe.

While a bottom-up calculation as to how much lithium will be consumed by the EV/ESS industry, plus by industry in general, provides a number for consumption, apparent demand will be somewhat larger as it needs to take into account how much material will be needed to rebuild inventory, after this year’s supply deficit and to build up working stock.

The post China’s new energy vehicle sales soar to new heights appeared first on Fastmarkets.

In 2022, the energy transition is even higher up the agenda for governments, investors and corporates alike. Copper, aluminium and battery raw materials will be needed in ever greater quantities to build the electric vehicles (EV), batteries and power grids of the future. Despite growing demand from EVs in particular, we expect 2022 to be a smoother year, as the global economy continues to put distance between itself and the most acute period of the Covid-19 pandemic.

Read on for a snapshot of our 2022 outlooks for key energy transition metals: aluminium, copper, lithium, cobalt, nickel, graphite.

Aluminium prices set to recover in 2022

Aluminium prices continued their correction in the fourth quarter of 2021 on the back of falling coal prices in China, plans by Russia to remove its export tax next year, and news of more smelting capacity restarts outside China (triggered by higher prices).

While we are cautious on near-term price sentiment, we believe most of the selling has been done, which should allow prices to move into consolidation mode. We are still bullish overall.

There is plenty to keep prices elevated, including low stocks, strong demand, uncertainty over European energy supplies, reduced aluminium output from China due to power rationing, geopolitical risks around developments near the Russia-Ukraine border and inflation concerns.

With on-warrant LME stocks at their lowest since 2005 and a large global deficit ahead in 2022, prices should gradually recover in the months ahead once a base has been made.

Deficit ahead in refined copper market in 2022, concentrates market close to balance

After an extended period of correction and consolidation between May and September 2021, copper prices have rebounded markedly since the start of October. We expect copper prices to perform well in the months ahead because we think that we are in a stagflationary environment (owing to supply chain bottlenecks) and believe that the deficit in the global refined copper market is set to prevail in 2022.

Total world copper mine production growth could surge to 7% in 2022 from just 2% in 2021. Such strong growth will bring the global concentrate market back to balance in 2022 after two deep deficit years. However, we expect a higher rate of supply disruptions next year given so much new and expanded capacity due to come online or ramp up.

We expect a bigger deficit of refined copper of 571,000 tonnes for 2021 as a whole, assuming 2.2% growth in refined output and 2.5% growth in refined usage. We also expect the refined market to remain in a deficit in 2022.

Even though the Omicron variant constitutes a potential bearish risk to our overall copper outlook, we continue to think that the bull market is not over yet. The consolidation from May was necessary after prices rose too fast and too hard. Sentiment is now in check and positioning is clean.

Consequently, we have a bullish price outlook for the rest of 2021 and going into 2022.

Lithium tightness expected to last well into 2022

We expect the lithium market to remain tight for the rest of 2021, because of price performance, stronger-than-expected demand growth and the slow return of idle production capacity. We expect additional supply to relieve the present tightness as 2022 unfolds.

For now, it appears as though the tightness will last well into the new year – the level of destocking by downstream processors, convertors, consumers and hoarders will determine whether prices hold at these levels, drift lower or push higher still.

Apparent demand is expected to be stronger than actual demand – the supply chain will likely want to restock after this expected period of destocking and expanding downstream capacity will need to carry ever larger amounts of working stock.

After a brief consolidation, the fact prices are on the rise again suggests consumers have decided they cannot afford to destock too much, with some prepared to chase prices higher in order to keep inventories topped up. However, given the already massive price gains in 2021, we expect consumers to be increasingly reluctant to chase prices higher and higher.

The question is how long it will take new material from expansions and restarts to be commercially available to the market. We should expect ramp-up issues and material will need to be qualified – a process that normally takes between 6-18 months depending on each company’s policy.

Cobalt prices expected to stabilize in 2022

Cobalt prices rallied strongly in 2021 with the Fastmarkets standard grade metal price up by 99.3% compared with the end of 2020, but the market is now being buffeted by both headwinds and tailwinds.

Benchmark cobalt prices continue to rise and that is lifting other cobalt prices in China, even though demand in China from NCM batteries is not as strong as it would have been had LFP batteries not seen a surge in demand. But, with so much of the world’s processing being done in China and the strained shipping conditions, it means supply from China to the international market is not as fluid as it would normally be.

With greater interest in LFP battery chemistries and with EV sales still potentially likely to suffer from the semiconductor shortage, we would not be surprised if the current rise in cobalt prices is limited and if prices fall back again as the fourth quarter of 2021 progresses.

We think prices are near their peak as we expect production increases in 2022, combined with weaker than expected demand from consumer electrics, due to semiconductor shortages, plus the surge in LFP demand, to weigh on prices.

Nickel traders continue to buy the dip for now

Generally, for nickel and many other metals exposed to the energy transition, we see recent price weakness as a healthy correction within an ongoing bull market. Nickel’s performance in the past month supports that thesis.

While China’s economy may put the brakes on somewhat in the face of macro headwinds, history shows that the government is quick to resolve problems and preserve growth. Meanwhile, the rest of the world still looks structurally bullish – demand is robust, infrastructure projects are under way, electrification is accelerating, shipping congestion and supply disruptions are affecting availability, stock levels are low, and central banks seem to be in no hurry to raise interest rates. This picture gives us confidence to maintain a bullish bias in our price forecasts and gives traders the confidence to continue their buy-the-dip strategy.

Graphite’s dependence on China

After exhibiting relatively stable price performance for much of the year, graphite prices have posted impressive increases in recent weeks, spurred higher by a combination of rising costs and tighter supply in China, shipping issues and higher freight rates, and stronger than expected demand from the EV battery sector this year.

We maintain the view that both flake and spherical graphite prices will trend stable to higher in the near term. The only potential reprieve we see for graphite prices would be if the power constraints diminish EV lithium-ion battery production, and in turn reduce demand for graphite anodes sufficiently to stem the upward pressure on graphite prices.

Numerous challenges are ahead for the graphite industry as it develops to meet the needs of the rapidly growing EV sector. While debate persists around cathode chemistries, with LFP cathodes gaining ground in China in recent months at the expense of NCM cathodes, these various lithium-ion battery chemistries are all utilizing graphite anodes. In the coming years, exponential growth from the EV sector will propel the industry’s graphite requirement far above demand from traditional consuming sectors.

The post Energy transition metals price outlook 2022 appeared first on Fastmarkets.

To set the scene, we saw prices for lithium peak in December 2017 at 175,000 yuan per tonne, then came a three-year price downward trend. This ended in the third quarter of 2020, at a price of 39,000 yuan per tonne. As of late November, the price has recovered at 205,000 yuan per tonne, which highlights a tight market.

New supply of lithium is on the way to market, and we will see a slow ramp up in output over the medium term, however this will take time to become readily available. A lot of that output will need to be qualified, so that will take time.

How did we get here?

1. There was an increase in supply between 2016-2019 from Orocobre, Mt Marion, Pilbara Minerals, Altura Mining, Alita Resources and AMG’s Mibra Mine

2. This led to oversupply, so we started to see prices fall between 2018-2020

3. With a falling market and a falling trend, people along the supply chain tend to destock; this is what we saw between 2019 and the first half of 2020

4. Demand hit by subsidy changes coming into effect in H2 of 2019

5. Just as EV demand started to recover in late 2019, we were hit by Covid-19 and that initially added to the downward movement. This carried on until we really saw producer response in October 2020.

Volatile times – the rebound

The current tight market is a result of a cycle of production cuts, prices rebounding, restocking, demand recovering through post-Covid-19 economy recovery and the delay in some restarts. As we wait to see the restarts and new capacity within the lithium market, the market is very tight.

• Ex-works China prices up LC 305% and LH 359%
• Cif China, Japan and Korea LC 319% and LH 222%
• DDP Europe and the US LC 247% and LH 200%
• Spodumene up 482%

How far can prices go?

We see this as a really hard question to answer, because they can go a lot further than you could think possible. We haven’t had a lot of history of the lithium market since it’s had this new role in the EV market.

With extreme supply tightness comes risk management opportunities. For many users of metal, there are obligations to supply products to their customers as they have reputations to keep. Sometimes, this means they have little choice but to bare the pain of a high price to remain a favoured supplier. This can mean they end up chasing prices higher.

Luckily, you can limit your risk by hedging. The recent LME and CME lithium contracts provide risk management opportunities as they grow in size.

Where lithium differs from other similar and relatively small markets such as nickel and tin, is in the fact lithium is undergoing such a big change, so we would not expect a price collapse. New supply is on the way and that will show up, to some extent, in prices.

It’s not all about supply

We’re seeing three key forces driving rapid growth in demand.

1. EV sales increase in China and Europe, and in the US from a low base/slow start

2. The combination of CO2 penalties and incentives to buy EVs

3. EVs are becoming more mainstream at a much quicker pace.

There are new projects and expansions on the horizon, but we know that these won’t all happen at the same time and won’t come on-stream smoothly. There will likely be ramp up issues and time needed for these lithium supplies to be qualified.

We’ll need about 1.2 million tonnes of lithium in 2025. This requires a lot of new projects to be funded soon, but time isn’t on our side. This is especially true when we know how long it can take for a mining project to get funded and up and running.

But this isn’t just about 2025. We have decades of strong growth ahead of us. It’s going to be an ongoing challenge for supply to keep up. We have recycling ahead of us, and that will help with creating more of a circular supply.

The challenges ahead

With high year after year compound average growth rates (CAGR), this leads to a massive challenge for the supply chain. New downstream capacity can be added in 1-2 years in terms of building new battery factories or new EV production lines. That’s not the same as upstream supply though, which can take 5-10 years.

In the short-term, there is another wave of extra lithium supply, and this should provide some relief to the current tightness as 2022 unfolds but is unlikely to swamp the market as the time it takes to ramp-up and qualify will vary. This will spread out the impact of the supply increases.

We see the market likely to return to being more balanced later next year, but we expect the supply chain will want to restock and will need higher levels of working stock, all of which will boost apparent demand. While prices still have further to run on the upside in the medium term, there is likely to be a lot less volatility next year as tightness fades.

The post The boom – bust – boom cycle taking place in the lithium market appeared first on Fastmarkets.

Cobalt got off to a quick start in 2021 due to strong demand growth from the electric vehicle (EV) sector, restocking and because of a constrained supply chain out of Africa. After starting the year at $15.30 per lb, Fastmarkets’ benchmark standard grade cobalt metal price climbed steadily to $25.30 per lb by mid-March, a rise of some 65%. Highlighting the disrupted supply chain across southern Africa was the rise in the cobalt payables that climbed to 93.5% in March, from 82.5% at the start of the year.

Since March, the market has quietened down considerably with metal prices initially pulling back while the market destocked after the price climb, with prices then trading within a range of $19.80-25.20 per lb and payables slipping back to 89%, suggesting a more balance market over the second quarter, but tightening more over the third quarter.

EV sales have been particularly strong this year and are expected to total around 5.8 million, up from 3.3 million in 2020 and 2.4 million in 2019. While cobalt demand has benefited from the strong demand growth from the EV sector, demand will not have been as strong as it could have been because there has been quite a shift in attitudes regarding which lithium-ion battery chemistry EV original equipment manufacturers (OEM) are using.

Second generation lithium iron phosphate (LFP) batteries have become increasingly popular in China and look set to be used more extensively outside China too. In China, LFP batteries’ market share climbed to 52% in the first eight months of 2021, up from 39% in 2020 and 33% in 2019. LFP’s gain means slower demand growth for cobalt. In addition, the trend is toward using higher nickel weighted-nickel-cobalt-manganese (NCM) batteries, which have lower cobalt content.

View the cobalt prices in this article

Fastmarkets sees this as a blessing for cobalt because it will reduce the chances of cobalt shortages and unsustainably high prices – it also means shortages are less likely to force OEMs to use non-cobalt chemistries.

The market is thought to be in a slight supply deficit this year and will remain in one next year, but with the giant Mutanda mine set to restart and ramp up again during 2022-23, supply should be able to grow with demand for now. As such, we expect prices to remain elevated in 2022, but below current levels.

What buyers are saying

• Medical and aerospace sectors are seeing demand return, but face supply concerns caused by a growing electronic vehicle manufacturing sector.
• The negotiation of future contract agreements has led some buyers to move to multi-year formula options to better secure material. 
• Despite the spread between European and Asian markets, arbitrage opportunities are limited due to logistical delays. Power issues in China are affecting output and creating concern for Asian markets.
• Spot availability is reportedly tight, though some consumers are well covered by long term agreements. 

What sellers are saying

• Arbitrage opportunities are present, but somewhat limited by the long lead times out of China and container shortages at ports. 
• Consumers have approached long-term agreement talks earlier than in previous years, due to supply concerns.
• Certain grades of material are facing shortages, particularly briquettes and broken cathode. Prices for standard cobalt grade have increased from $23.40-24.25 per lb on September 1 to $25.85-26.25 per lb on October 1.

London metals week remains a key milestone in the commodities calendar. Find out why it’s still a big draw for the world’s commodity trading community, and discover our special LME Week 2021 coverage on key commodities such as nickel, lead, tin and lithium.

The post Strong growth for cobalt, but some headwinds too | LME Week 2021 appeared first on Fastmarkets.

Base metals
Three-month base metals prices on the LME were mixed this morning; it looks as though traders are hesitant about whether the pause in the recent sell-off is indeed a dip-buying opportunity. Given the strong dollar and a possible rise in geopolitical tensions in Europe that could affect energy supply, this may be a time to be on the sidelines.

Nickel was up by 0.1% at $19,755 per tonne and tin was up by 0.3% at $37,850 per tonne, the rest were down by an average of 0.3%, with copper down by 0.3% at $9,603 per tonne.

Conversely, most of the December base metals contracts on the SHFE were firmer, the exception being zinc that was down by 5 yuan ($0.78) per tonne. The rest were up by an average of 1.3%, led by a 2.4% rise in tin, with aluminium, nickel and lead each up by around 1.2%, while copper lagged behind with a 0.4% gain to 70,530 yuan per tonne.

Precious metals
The precious metals were mixed this morning: gold was down by 0.2% at $1,858.60 per oz, but it has been rallying strongly in recent days; it is up from around $1,760 per oz as recently as November 3. It does look as if the pick-up in inflation is driving gold, this is especially so given gold prices are up while the dollar is rallying. A pick-up in geopolitical tension could add fuel to the rally.

Wider markets
The yield on US 10-year treasuries remains relatively strong at 1.56% this morning, compared with 1.55% at a similar time on Thursday – once again we see this as the market being more hawkish than the Federal Reserve.

Asia-Pacific equities were mainly firmer on Friday morning: the Nikkei (+1.13%), the ASX 200 (+0.83%), the Kospi (+1.5%) and the Hang Seng (+0.18%), while the CSI 300 (-0.18%) was weaker.

Currencies
The US Dollar Index was extending gains this morning and was recently at 95.18, compared with 95 at a similar time on Thursday.

With the US dollar climbing, the other major currencies were under pressure: the euro (1.1446), the Australian dollar (0.7293), sterling (1.3371) and the Japanese yen (114.21).

Key data
Friday’s economic agenda includes German wholesale price index, EU industrial production and US data on job openings, preliminary University of Michigan consumer sentiment and inflation expectations and there is a US treasury currency report.

In addition, there are Economic and Financial Affairs Council (Ecofin) meetings and UK Monetary Policy Committee member Jonathan Haskel and Federal Open Market Committee member John Williams are scheduled to speak.

Friday’s key themes and views
This week has been about consolidation and an attempt to rebound in the base metals, but usual dip-buying is struggling to attract follow-through buying. For the big picture, we see the slowdown in China as a major headwind, but the rest of the world still looks structurally bullish, with infrastructure projects under way, shipping congestion and low stock levels affecting availability, which in turn in creating pent-up demand, all of which seems bullish. But, in the short term, we expect the market may well get more nervous about the geopolitical situation than they are currently.

Given today’s performance in gold, the yen and US treasury yields, haven-demand has not picked up yet. Given the potential geopolitical situation and the inflation back drop, gold may well attract more haven interest.

The post Base metals prices mixed as participants question if this is a ‘buy the dip’ moment appeared first on Fastmarkets.

Base metals
Three-month base metals prices on the LME were mainly stronger this morning, the exception being lead ($2,332.50 per tonne) that was down 0.3%. The rest were up by an average of 1.3%, led by a 2.1% rise in aluminium ($2,632 per tonne), with copper up by 1.2% at $9,590 per tonne.

Likewise, most of the December base metals contracts on the SHFE were firmer, the exception also being lead that was down by 0.9%. The rest were up by an average of 2.3%, led by a 4.3% rise in tin, with aluminium up by 3.6% and copper up by 0.5% at 70,550 yuan ($11,037) per tonne.

Lead prices seem to be lagging, but lead was the metal that held up the best during the recent downside correction across the base metals.

Precious metals
Spot gold prices were up by 0.2% at $1,852.52 per oz, this after a 1% rise on Wednesday. Silver ($24.89 per oz) and platinum ($1,081 per oz) were up by 1% and 1.3% respectively this morning, while palladium was off 0.2% at $2,031.20 per oz. It does look as if the pick-up in inflation is driving gold, this is especially so given gold prices are up while the dollar is rallying.

Wider markets
The yield on US 10-year treasuries has jumped to 1.55% this morning, compared with 1.47% at a similar time on Wednesday – once again we see this as the market being more hawkish than the Federal Reserve.

Asia-Pacific equities were mixed on Thursday morning: the Nikkei (+0.59%), the ASX 200 (-0.57%), the CSI 300 (+1.57%), the Kospi (-0.18%) and the Hang Seng (+1.28%).

Currencies
The US Dollar Index was extending gains this morning and was recently at 95, compared with 94.14 at a similar time on Wednesday.

With the US dollar climbing, the other major currencies were under pressure: the euro (1.1478), the Australian dollar (0.7310), sterling (1.3411) and the Japanese yen (113.95).

Key data
Economic data already out on Thursday showed a barrage of mixed data from the United Kingdom, including gross domestic product, industrial production, manufacturing production, index of services, goods trade balance and business investment – see table below for details.

Later there is a European Central Bank economic bulletin and economic forecasts from the European Union.

In addition, UK Monetary Policy Committee member Catherine Mann is scheduled to speak.

Thursday’s key themes and views
Earlier in the week we were waiting to see if there would be follow through-buying after the initial rebound on Monday. Since then, prices have generally been consolidating, albeit with a slight upward bias. While China may have the brakes on, the rest of the world still looks structurally bullish, with infrastructure projects under way, shipping congestion and low stock levels affecting availability, which in turn in creating pent-up demand.

The precious metals are performing strongly, with gold, silver and platinum breaking higher through resistance levels, while palladium is still stuck in a sideways range. Gold seems to be leading the way, with its focus on inflation.

The post LME base metals prices find support, but rebounds remain fragile appeared first on Fastmarkets.