Base Metals: Corona crisis keeps prices low – ABN Amro
The pressure on base metals prices is high. The strong macroeconomic downturn due to the corona crisis is having a strong downward effect on the trend in aluminium, copper, nickel and zinc prices, Casper Burgering, a Senior Economist at ABN Amro brief.
“The relatively aluminium weak decline compared to the other base metals is because the aluminium market has been subject to price pressure for some time due to overproduction and high availability.”
“We expect a deepening global economic contraction in the short-term and a longer term economic slowdown before a strong and sustainable recovery takes place. This will have a severe impact on copper. Uncertainty remains high and will keep the copper price relatively low in the next two quarters.”
“European trade activity in zinc has largely stalled as an increasing number of countries have taken drastic measures to slow the coronavirus outbreak. This will slow down economic activity and keep zinc price low for the time being.
“We think the nickel price will remain relatively low in the coming months. Stainless production in China will remain weak in the first half of this year. There is a good chance that confidence in nickel will increase again during the second quarter. Still, because inventories will remain high for the time being, renewed confidence will not immediately lead to a significant price recovery.”