Mood change and high surpluses on the metal markets
by David Fleschen
Today the National People's Congress of the Communist Party began in Beijing, the most important political gathering in China. It was originally due to take place at the beginning of March and was postponed for the first time in history because of the coronavirus. This meeting is usually used to set the course for the country's economic future and to approve the government's economic targets. As already suspected in advance, the government has not announced a numerical GDP growth target for 2020 this time because of the coronavirus and global uncertainties. The main focus should now be on measures to support the economy. Nevertheless, there has been an abrupt change in sentiment on the financial markets, which is reflected among other things in Asian stock markets, some of which have fallen sharply. This is primarily due to the increasing tension between the USA and China. The metal prices are therefore under some pressure this morning, although copper is still holding up relatively well at just under USD 5,300 per tonne. Only nickel is giving way more strongly: It falls by over 5% to $12,100 a tonne.
As expected, the global zinc, lead and nickel markets were already in surplus supply in the first quarter. This is probably due to the corona virus, which was rampant in China at the time and also had Europe under control from March onwards. According to data from the International Lead and Zinc Study Group, the surplus was 240 thousand tonnes for zinc and 19 thousand tonnes for lead. In both cases, weak demand was responsible for this (-4.1% and -7.4% year-on-year). The surplus for nickel was 45.7 thousand tonnes according to data from the International Nickel Study Group. There was still a considerable deficit in the comparable period of the previous year.
Source: Commerzbank Research, Photo: Fotolia