Monthly Market Analysis Outlook – We Expect Base Metal to Be Trade Lower in February Month as risk aversion mode in the markets amid fresh concerns over Greece. For Feb’15, we expect base metal prices to trade lower as risk aversion mode in the markets amid fresh concerns over Greece, following reports that the European Central Bank is unwilling to back government plans to renegotiate the terms of the country’s €140 billion bailout. Further, rout spilled by the falling crude prices along with weak Chinese data will continue to drag prices lower.
Copper prices are likely to trade lower in Feb’15 as rising risk aversion along with supply glut concerns will be a drag on prices. However, restocking ahead of Chinese New Year and increasing chances of the SRB (State Reserve Bureau) stockpiling the red metal will restrict sharp fall. Also, decision by the People’s Bank of China to cut its reserve requirement ratio by 50bps to 19.5 percent will be supportive.
We expect Aluminium prices to trade higher in Feb’15 due to increasing demand for the metal in the auto industry as manufacturers focus on saving weight to boost fuel efficiency. Also, consumption exceeds output in Europe and the US, helping support prices despite a projected surplus in China. On the flip side, collapse in imports of Indonesian bauxite has led both to new inbound flows from countries such as Malaysia and the Dominican Republic and increased imports of alumina.
We expect Nickel prices to trade higher in Feb’15 as Sumitomo Metal Mining Co., Japan’s biggest nickel producer, expects global output of the metal to fall short of demand by 12,000 metric tons in 2015 compared with a 36,000-ton surplus last year for the first time in five years as supply from China drops. Further, expectations of falling nickel ore and concentrate imports into China in the next few months as shipments from Philippines are affected due to monsoons in parts of Southeast Asia will boost prices.