Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

With supportive stimulus packages announced by central banks in many countries and economic recovery in China, base metals’ demand is projected to recover by the end of Q42020, says Tapan Patel- Senior Analyst, Commodities at HDFC Securities in an interview with Davis Index. 


How and when will we see recovery in major base metals (aluminium, lead, zinc, and lead) demand?

The easing of lockdown measures and restart of economic activities, especially in China has revived demand for base metals significantly compared to April 2020. China accounts for almost 50pc of the global consumption of industrial metals. A recovery in manufacturing activities has boosted base metals prices from March lows.

We can expect a slow and steady recovery in base metals demand in the coming months with sectors like the manufacturing and industrial becoming major contributors. A complete recovery is expected by the end of Q4 2020. The current inventory surplus due to lockdown measures, however, may keep a check on the base metals prices even after demand rises.


Outlook for LME lead, zinc, aluminium and copper price levels by the end of August

Copper prices on LME are expected to continue their bullish trend with support at $6,200/mt. LME copper has strong resistance at $6645, the breakout may boost prices towards $6,800/mt. LME zinc prices may touch $2,560/mt in the short term with support at $2,160/mt. LME aluminium prices may trade sideways to up, with resistance at $1,870/mt and support at $1,650/mt. LME lead prices are struggling to break $1,900 with support at $1,780/mt. Prices may reach $2,000/mt in August with a break out above $1,900/mt.

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