Expert Q&A: Price Forecast for Aluminum, Copper 2015

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As we’ve heard many times before from our readers, conference attendees and loyal followers, “We’re not as interested in where metal prices have been, we’re much more interested in where prices are going.”

We at MetalMiner have done our best to heed the call, from our daily coverage all the way up to our monthly metal price forecast offerings, and with bearish markets prevailing we thought it best to provide an update for aluminum, copper, steel and stainless markets.

Since Q2 has kicked off, we’ve been tracking movements across ferrous and base metals sectors (as well as exploring why trends happen in the first place). We also thought it was time to give our audience a comprehensive Q2/Q3 metal market forecast, which will all go down live this Friday (more on that below, including a Q&A sneak-preview with MetalMiner Executive Editor Lisa Reisman). First, here’s a rundown of what we’ve been following in aluminum and copper markets. Look for steel and stainless market outlook previews later this week.

Aluminum Price Forecast

Aluminum_Chart_April-2015_FNLAluminum lost most of its gains in the second half of 2014. In Q1 2015, prices remained rangebound as oil prices stabilized and the dollar caught its breath. What should we expect for the rest of the year? A few factors make us expect more on the downside:

FORECAST: MetalMiner’s most recent monthly aluminum price forecast pointed to a downward trend for the next 2 months, with support and resistance levels at $1,680 and $1,850 per ton, respectively. (Find out what we mean: take a free trial.)

For the latest 3-month and 6-month price targets and strategies, register now for our upcoming webinar, Q2 and Q3 Metal Market Forecast (And How Bearish Markets Create Opportunities for Global Trade Cost Reduction).

Copper Price Forecast

Copper_Chart_April-2015_FNLAfter the huge drop during the second half of last year, we believe that there is no point in freaking out over copper’s recent two-month rally. Picking bottoms is very hard and definitely not a good strategy for metal buyers. Was February the bottom of copper’s bearish market? Nobody knows. Since 2011, we do know that trying to guess the bottom is a terrible strategy to take with copper. Prices keep falling from trough to trough…to trough.

On the fundamentals side, we don’t see any game-changing factor that could drive a significant upturn in copper prices. The market remains far from a deficit and the macroeconomic outlook from China looks poor. Copper demand lacks momentum.

Now, with the fundamentals picture dormant, at best, can we expect copper prices to rise above last year’s levels? That seems very unlikely. Especially while a strong dollar and low oil prices are having a depressing effect on commodities, and many other base metals are making record lows.

Before copper is ready to turn around, we’ll have to see more price strength and changes in the demand outlook for commodity markets. Both need to turn upward. We believe that the last four years gave copper buyers reasons enough to wait for real signs of strength before making large volume commitments.

FORECAST: MetalMiner’s most recent monthly copper price forecast pointed to an upward trend for the next 2 months, with support and resistance levels at $5,500 and $6,800 per ton, respectively. (Find out what we mean: take a free trial.)

For the latest 3-month and 6-month price targets and strategies, register now for our upcoming webinar, Q2 and Q3 Metal Market Forecast (And How Bearish Markets Create Opportunities for Global Trade Cost Reduction).

Now For Something Completely Related: A Q&A with Executive Editor Lisa Reisman

lisa reisman metalminer headshotQ: Do you have a personal take on the bearish market environment we’ve been seeing lately?

Lisa Reisman: My take on the bearish market is that I don’t see any near-term end in sight. The big macro drivers appear to be stuck in their current direction. Specifically, I’m talking about oil prices and USD exchange rates. The Greek debt situation is only going to cause the dollar to continue its rise and/or maintain its current level of support. Furthermore, I’m struck by the sluggishness of the Chinese economy, which has placed a strong damper on metals demand. On top of all of this, we see evidence of lots of Chinese over-production with the overage making its way to US markets and Europe in particular. But one thing I do know – prices won’t stay bearish forever.

Q: Which metal or category makes you most excited for the balance of this year, from the perspective of where price levels are now and where they could be going?

LR: Honestly, nothing “excites” me. But I guess excitement is in the eye of the beholder. If you are a commodities trader, today’s markets are a bit more fun than, say, last year’s because we have more price volatility. From an industrial metal buying perspective, bearish markets come with both a good and a bad. They are great from a sourcing standpoint because prices are falling and in a fixed price sales environment it means manufacturers may be able to gain some margin points. However, it’s bad from a producer and service center standpoint because lower prices tend to equate to lower profits, which means producers may decide to shut lines down and lay off workers (never a good thing). It can also be a negative if a company likes to try and speculate and take positions only to find that prices continue falling (not a great idea). On the flip side, nothing makes an industrial buyer more nervous than rising prices, so the fact that we don’t see that on the near-term horizon should give metal buying organizations some comfort.

Q: If my company isn’t playing extensively on the international trade front, would it still benefit me to attend the upcoming webinar this week?

LR: Even smaller players on the international trade scene stand to benefit from attending this week’s webinar. For example, simply calculate your company’s working cost of capital and inventory tied up in international trade. Take that number and cut it by 10% or 20%. Does that make a difference to your business? Maybe yes or maybe not, but even smaller trade players stand to reap big benefits of learning how to reduce inventory, DSO and working capital – not to mention reduce the number of LOIs (letters of indemnity).

Register for the webinar now.

Comments (3)

  1. steve says:

    Hi Lisa ,
    is there future in aluminum business still?

  2. Lisa Reisman says:

    Hi Steve,
    There is most definitely a future in the aluminum business! What goes down must go up and nothing kills high prices like high prices. So as long as there is volatility, there is always money to be made.

    As for the industrial guys? Depends where you sit.
    🙂
    LAR

  3. abhishek singh says:

    Should the copper price should be more down or up in the coming few days??

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