Base metals: metal markets still well supplied
by Hans Diederichs
As reported by the International Lead and Zinc Study Group (ILZSG), the global zinc and lead market showed surplus supply in the first five months of the year. The supply of zinc exceeded demand by 223 thousand tonnes. At the same time last year there was a deficit of 109 thousand tonnes. Both higher production and lower demand contributed to the current surplus: Production increased by 1.6% over the previous year, while demand fell by 4.4%. The coronavirus has thus far had a much greater impact on demand - it has hit zinc-intensive sectors such as the steel industry hard - than on supply. According to ILZSG data, the lead market surplus from January to May was 23 thousand tonnes. In the previous year the market was almost balanced after five months. For lead, demand fell more sharply than supply (-4.7% vs. -4.2%). The coronavirus has also affected sectors that usually demand a lot of lead, especially the car industry. The global copper market was also still well supplied. According to data from the International Copper Study Group (ICSG), the supply surplus in the first four months of the year was 59 thousand tonnes (seasonally adjusted 73 thousand tonnes). At the same time last year there was still a high deficit. The current surplus is due to weak demand, which, according to the ICSG, has fallen by 2.5% due to corona. Refinery production, on the other hand, was almost unchanged from the previous year, as was mine production. However, the latter was down in April due to production cutbacks in Peru in the course of the fight against corona virus there. If other countries, such as Chile for example, also produce less copper, the market for copper concentrates could become noticeably tighter. This would then also have an impact on refining output. In our opinion, the copper price has already anticipated such a possible development.
Source: Commerzbank Photo: AM Krakau