London Metal Exchange Base Metals Performance in 2014

12 Jan 2015

Aluminium (Al) – US$/t

Prices for aluminium, the second most widely used metal after steel, have been under pressure for years as the market struggles with oversupply and soaring stockpiles. Aluminium’s price trend on the London Metal Exchange was upward during 2014 with an overall average price of $1,926.27 (Table 1). The metal experienced a high of $2,113.75 in August 2014, its highest level since February 2013 and a low of $1,671.75 in March 2014. Following production cuts and an Indonesian ore export ban in 2014, the aluminium market (excluding China) is forecast to reach a deficit in 2015.

 

Table 1. Average cash price of Aluminium in 2014 on the London Metal Exchange

LME Al avg price graph 2014

 

Cobalt (Co) – US$/t

Prices for cobalt climbed higher during 2014. Cobalt outperformed other base metals on the London Metal Exchange with an increase of 17% year on year. The average cash price of cobalt was $30,866.41 with a high of $33,000.00 in September 2014, its highest level since January 2012 and a low of $28,600.00 in March 2014 (Table 2). Cobalt metal production has seen strong growth since 2010 and as a result, the metal has been in surplus for a few years. Consumption is gradually increasing with particular demand from battery manufacturers. China accounts for 36% of global consumption.

 

Table 2. Average cash price of Cobalt during 2014 on the London Metal Exchange

LME Co avg price graph 2014

 

Copper (Cu) – US$/t

Copper’s price trend on the London Metal Exchange was downward during 2014 with an overall average cash price of $6,859.20. The metal reached a high of $7,439.25 in January 2014 and a low of $6,305.50 in December 2014, its lowest level since June 2010 (Table 3). According to the International Copper Study Group, world copper refined production is estimated to have increased by 8% in the first nine months of 2014 compared with the same period in 2013. World copper usage is estimated to have increased by around 11% compared with the same period in 2013. Should the US dollar continue to remain strong, marginal costs of copper production will decrease resulting in increased supply, keeping copper prices low during 2015.

 

Table 3. Average cash price of Copper during 2014 on the London Metal Exchange

LME Cu avg price graph 2014

 

Molybdenum (Mo) – US$/t

Prices for molybdenum ended slightly lower on where they began during 2014. The average cash price of molybdenum in 2014 on the London Metal Exchange was $25,084.71 with a high of $32,500.00 in June 2014, its highest level since August 2011 and a low of $19,600.00 in December 2014 (Table 4). China’s Ministry of Commerce recently cancelled its policy on export quotas for molybdenum, rare earths and tungsten after losing its World Trade Organisation appeal. The dropping of the export restrictions could prove positive for China’s molybdenum sector resulting in a potential surge in exports. Worldwide demand for the metal is currently low.

 

Table 4. Average cash price of Molybdenum in 2014 on the London Metal Exchange

LME Mo avg price graph 2014

 

Nickel (Ni) – US$/t

Prices for nickel climbed higher during 2014. The average cash price of nickel in 2014 on the London Metal Exchange was $16,864.59 with a high of $21,175.00 in May 2014, its highest level since August 2011 and a low of $13,362.50 in January 2014 (Table 5). The Indonesian government halted exports of unprocessed nickel ore in January 2014 in an effort to encourage local miners to build smelters. The export ban drastically changed the outlook for the nickel market, which has been in oversupply in recent years. The ban is yet to make a significant impact on supply.

 

Table 5. Average cash price of Nickel in 2014 on the London Metal Exchange

LME Ni avg price graph 2014

 

Lead (Pb) – US$/t

The general trend for lead in 2014 was slightly down with an average cash price of $2,095.25 on the London Metal Exchange. The metal reached a high of $2,268.50 in July 2014, its highest level since February 2013 and a low of $1,813.75 in December 2014 (Table 6). An increased demand for the metal used in car batteries pushed prices up between July and August 2014, however tumbled from September to December 2014. According to the International Lead and Zinc Study Group, world supply exceeded demand from January to October 2014. Overall lead mine production decreased 2.5% compared to 2013. With global production estimated to tighten, expectations are for demand to exceed supply in 2015.

 

Table 6. Average cash price of Lead in 2014 on the London Metal Exchange

LME Pb avg price graph 2014

 

Tin (Sn) – US$/t

Prices for tin dropped steadily in 2014, underperforming other base metals on the London Metal Exchange with a decrease of 13% year on year. The average cash price was $21,908.47 with a high of $23,902.50 in April 2014 and a low of $18,525.00 in December 2014, its lowest level since August 2012 (Table 7). Tin prices are expected to gradually rise during 2015-2016 due to greater demand, particularly in the use of electronic products.

 

Table 7. Average cash price of Tin in 2014 on the London Metal Exchange

LME Sn avg price graph 2014

 

Zinc (Zn) – US$/t

Prices of zinc climbed higher in 2014 with an average cash price of $2,161.67 on the London Metal Exchange. The metal reached a high of $2,419.75 in July 2014, its highest level since February 2011 and a low of $1,941.75 in March 2014 (Table 8). According to the International Lead and Zinc Study Group, the global market for refined zinc metal was in deficit from January to October 2014 due to an increase in demand of 5.9%.

 

Table 8. Average cash price of Zinc in 2014 on the London Metal Exchange

LME Zn avg price graph 2014

 

 

Sources:

London Metal Exchange – www.lme.com

International Copper Study Group – www.icsg.org

International Lead and Zinc Study Group – www.ilzsg.org

 

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Warnings

Nothing in this document is advice by or opinion of the author. Past performance is not a reliable indicator of future performance. The information in this document is based solely on consideration of the investment and/or trading merits of the financial product(s) alone without taking into account the investment objectives, financial situation and particular needs of any person. Before making an investment decision, the reader must consider whether it is personally appropriate for them in light of his or her financial circumstances and should seek further advice.

 

 

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