'Base metals to rise in Q4'

Metal Recycling News  |  2012-10-19 08:13:51   |   By

Canadian investment bank RBC Capital Markets still foresees firmer base metals like copper aluminum and nickel prices to rise in the fourth quarter of this year.

LONDON (Scrap Monster): Canadian investment bank RBC Capital Markets still foresees firmer base metals like copper aluminum and nickel prices to rise in the fourth quarter of this year.

According to the Toronto based bank, overnight economic data out of China, including as-expected gross domestic product but stronger-than-forecast industrial production and retail sales, are encouraging.

“Things in Europe are still messy and the strength of the recovery in the US is still in question, but that is likely to take a back-seat role as the last few weeks of the presidential election heat up,” RBC noted.

“We are still looking for higher prices in Q4, how high is a big question. It’s hard for us to see $9,000(-per-metric-ton) copper by year-end given the resistance the red metal ran into at $8,700 earlier in the year,” they added.

The firm continued that, “Aluminum could easily get back up to $2,200 given all the games going on with stocks, spreads and shorts getting pinched, but it’s hard for us to see it through $2,400. Zinc will likely continue to trade at a slight discount to aluminum as any further relative weakness to the light metal will result in substitution back into higher zinc content materials in the alloys market.”

“Nickel should easily get back above $19,000 as it follows the other metals but unless we begin to see a serious recovery in the steel/iron ore markets, it will likely struggle to get through $20,000. Lead and tin have had the best rallies since the summer lows (both over 30%) and we doubt there will much further upside beyond the recent highs ($2,329 for lead and $22,800 for tin) despite the tightness that keeps appearing in front-end spreads,” RBC concluded.