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Base Metals Are Trading at Multiyear Lows

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LME 3M copper at May 2009 levels

In the week ending on November 20, except LME (London Metal Exchange) tin, all base metals traded at their multiyear lows. The weak Chinese economic health, the stronger US dollar, and weak global demand for base metals resulted in the decline of base metals in the week ending on November 20.

LME 3M copper fell by more than 5% in the week ending November 20 and ended the week at $4,580 per metric ton, the lowest level since May 2009. LME copper closed in a loss in four out of five trading sessions last week. Since the beginning of 2015, LME 3M copper fell by 27.3%. LME 3M aluminum consolidated for the first three days of the week and declined to multiyear lows by the end of the week along with other base metals. LME 3M aluminum fell by 3.0% last week and ended the week at $1,447 per metric ton, the lowest close since May 2009.

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 LME nickel was the biggest loser in base metals

LME 3M nickel was the biggest loser of the week in base metals. LME nickel fell by 7.4% and closed the week at the lowest level since July 2003 at $8,730 per metric ton. Last week, LME 3M zinc fell by 3.5% to end the week at $1,566 per metric ton. In the first three sessions of the week, LME Zinc fell by 6.4% and reached 2009 price levels. Later, zinc recovered from lows because of production cuts declared by Chinese Smelters. Last week, LME lead and tin fell by 1% and 0.7%, respectively.

In 2015, the weak Chinese economy has been the main driver of copper prices. Top base metal ETFs like the PowerShares DB Base Metals Fund (DBB) and the SPDR S&P Metals & Mining ETF (XME), as well as base metal miners like BHP Billiton (BHP) fell in most of 2015. In a situation where even production cuts from top miners like Freeport-McMoRan (FCX), Glencore (GLNCY), and Asarco (AR) weren’t able to reverse the direction of falling base metal prices, strong economic data from China is the brightest hope for bringing base metals out of multi-year lows.

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