Categories: Base Metals / General Market Commentary
Topics: General Base Metals / General Market Commentary

Copper, lead, zinc prices to stay on the boil

Industrial metals prices are projected to jump 16% this year due to strong demand, especially from China, and supply constraints, including mine disruptions in Chile, Indonesia and Peru, the World Bank says in its commodities markets outlook published on Wednesday.

Researchers at the institution believe zinc has the brightest prospects this year and will follow up 2016's 60% price gain with a 32% jump this year.

The Gamsberg zinc project  in South Africa and Dugald River in Queensland are expected to add new production in 2018
Lead, often a byproduct of zinc mines, will also build on last year's gains and is expected to add 18% in value due to mine supply constraints brought on by permanent closures due to resource exhaustion, as well as discretionary closures and downscaling in Canada, Peru and Australia top zinc miner and trader Glencore.

[Lead] demand remains strong for the battery and industrial sectors, including increasing demand for “stop/start” vehicles, which use batteries containing 25 percent more lead than conventional units. However, lead demand faces threats from a maturing electric bike sector in China and alternate battery technologies (e.g., lithium).

The authors of the report also warn however that zinc-lead fundamentals may change longer term as higher prices "prompt greater supply in China, and Glencore’s idled capacity eventually restarts."

Copper, lead, zinc prices to stay on the boilThe Gamsberg zinc project  in South Africa (240ktpa capacity) and Dugald River in Queensland (170ktpa) are expected to add new production in 2018, "while a slowing property market in China and threats of substitution may ease demand," according to the report.

The outlook is also positive on the price of bellwether metal copper which is expected to increase by 18% boosted by disruptions.  Strikes in Chile and Peru, and contractual disputes in Indonesia recently took more than 10% of global output offline.

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