Base metals prices & investing-opportunities

Investing
Opportunity
Using Base Metals
Prices and Base
Metals News
A collection of articles from Copper, Iron, Lead, Nickel and
Zinc Investing News By Charlotte McLeod

Base Metals Prices 2018
© 2018 Base Metal Investing News 1
Table of Contents
Copper Trends 2017: Prices Up on Strong Demand and Short Supply ......................................2
Copper Outlook 2018: Analysts Cautiously Optimistic ............................................................5
Copper Forecast 2018: CEOs Bullish on Market.....................................................................10
Zinc Trends 2017: Prices at Decade High After Supply Crunch ...............................................13
Zinc Outlook 2018: Will Prices Continue to Rally?.................................................................17
Zinc Forecast 2018: Companies Weigh In..............................................................................21
Nickel Trends 2017: Deficit Expected on Supply Challenges ..................................................24
Nickel Outlook 2018: Price Gains and Growing Battery Boom...............................................27
Iron Outlook 2018: Experts Say to Watch China....................................................................31
Lead Outlook 2018: Supply Tightness to Continue ................................................................34

Copper Trends 2017: Prices Up on Strong
Demand and Short Supply
A look back at the main copper trends of 2017, from supply
and demand dynamics to price performance over each
quarter of the year.
Copper prices have surged more than 22
percent in 2017 on the back of a strong
demand outlook, supply disruptions and
speculation from investors.
In fact, the red metal broke the $7,000 per-
tonne-mark in October and has been trading
near that level since then.
As the year comes to a close, the Investing
News Network is looking back at key
copper trends this year, from mine disruptions to surging stockpiles.
Read on to learn what happened in the copper market in 2017, from the main supply
and demand dynamics to how analysts thought the metal performed in each quarter of
the year.

Copper’s price performance from January 1, 2017 to November 30, 2017. Chart
via Kitco.
Copper trends Q1: Mine disruptions and labor negotiations
Copper prices saw a modest uptick in the first quarter of the year, gaining more than 7
percent in Q1. During the period, supply concerns, as well uncertainty about US
President Donald Trump, were the metal’s main price drivers.
In terms of supply, all eyes were on copper mine disruptions. Chile’s Escondida,
the world’s largest copper mine, faced a 43-day strike, the longest stoppage in its
history, due to labor negotiations between union workers and BHP Billiton
(NYSE:BHP,LSE:BLT,ASX:BHP) management.
In addition, Freeport-McMoRan’s (NYSE:FCX) Indonesia-based Grasberg mine, the
second-largest copper mine in the world, stopped production for over a month due to a
smelter strike and issues surrounding the renewal of the company’s mining permit.
These supply disruptions were estimated to reduce global copper output by 5 to 7
percent, but bearish demand levels and an increase in stockpiles limited copper price
gains. In the first three months of 2017, inventories of copper in exchange-monitored
warehouses rose more than 40 percent, hitting their highest levels since 2013.
In Q1, analysts were cautious about the demand outlook from top-consumer China, as
the economy from the Asian country was expected to slow down during the year. The
red metal traded in a range of $5,000 to $5,760 during the quarter.
Copper trends Q2: Demand worries increase
The copper price stalled in the second quarter, ending the period almost neutral after
being hurt by worries about global demand. That said, supply concerns
continued during the quarter, and together with a weaker dollar helped drive the copper
price.
Strikes at copper mines made news headlines again in the second quarter. In May,
thousands of workers at Grasberg in Indonesia decided to go on strike after Freeport
laid off almost 10 percent of its workforce. Workers at the Zaldivar copper mine in Chile
also voted to strike after labor negotiations with owners Antofagasta (LSE:ANTO) and
Barrick Gold (TSX:ABX,NYSE:ABX) failed.
In terms of demand, LME inventories continued to rise, although warehouse stocks had
been performing with volatility since January. Several analysts also called for weaker
demand in China during the second half of the year, as the government looked to
tighten financial conditions. Copper traded between $5,500 and $5,940 during the
quarter.

Copper trends Q3: Speculation boosts prices
The copper price rose more than 9 percent in Q3, trading near the $7,000 mark. A
strong demand outlook from China, a weaker US dollar and speculation from investors
boosted prices.
Many analysts warned at the time that the price rally was “overhyped,” and would run
out of steam as it wasn’t based on fundamentals. Prices did ultimately pull back at the
end of the quarter, as the dollar rebounded and warehouse stocks increased again.
During Q3, supply worries eased as top copper producer Chile reported higher output in
July and Freeport said it would continue to export copper while negotiating a new permit
with Indonesia.
In terms of demand, all eyes were on China, as demand from the Asian country slightly
outpaced expectations; however, worries that the property sector in China was cooling
down due to ongoing tightening measures had many analysts concerned about even
weaker demand going forward.
Demand from other countries was also flat, with some markets becoming saturated,
according to analysts. The red metal traded in the range of $5,780 to $6,970 during the
period.
Copper trends Q4: Prices jump above $7,000
The last quarter of the year saw copper prices break past $7,000, touching a more than
three-year high, on the back of positive Chinese data and a weaker US dollar. As of
November 30, the red metal had traded in between $6,450 and $7,177 during the
quarter.
During Q4, Chinese economic data showed growth in the country, but efforts to cut risks
in property and debt started to weigh on prospects for the base metal. That said,
analysts and market participants remain bullish on copper moving forward.
“The overall mood is relatively bullish. From a global perspective, slowing investment in
copper mines will lead to tight concentrate supply over the next two years. And in China,
we don’t see any clear bearish trend for downstream demand in our model,” Adam
Fan, CEO of consultancy Shanghai Metal Market, recently said.

Copper Outlook 2018: Analysts
Cautiously Optimistic
What’s the copper outlook for 2018? Analysts are cautiously
optimistic about the red metal in 2018. Read on to learn what
they had to say.
Market participants were expecting copper
to have a bright 2017, and for 2018 most
forecasts for the base metal remain bullish.
Copper prices climbed in the second half of the
year, breaking the $7,000-per-tonne-level,
and they have traded in that range since then. A
strong Chinese demand forecast, supply
worries and speculation supported prices this
year. On Tuesday (December 12), the red metal
was changing hands at $6,663.
But as the year comes to an end, what can investors expect in 2018? Read on to learn
more about the copper outlook for 2018, from supply and demand information to prices.
Copper outlook 2018: Price performance review
At the end of 2016, market participants were overall positive about copper, expecting
prices to continue to increase during the year. As mentioned, copper didn’t
disappoint, with prices starting to climb during the second half of the year; overall they
are up more than 18 percent year-to-date.
As the chart from Kitco below shows, the highest point of the year came in October,
when prices broke $7,000. A strong Chinese demand forecast, supply worries and
speculation supported the rally.

Chart via Kitco.
Meanwhile, copper’s lowest point of the year came in May, when prices were trading at
$5,465.50 due to a rise in stockpiles, a stronger US dollar and risk aversion caused by
geopolitical tensions.
At this time last year, Thomson Reuters GFMS base metals analyst Karen Norton
believed copper prices had bottomed out in 2016, and that prices would rise only at a
low double-digit rate in 2017. “Increasingly, however, speculative involvement has
tended to exaggerate moves such that copper has outperformed from a fundamental
perspective,” she said.
Similarly, Dan Smith, head of commodities research at Oxford Economics, said base
metals prices generally surprised to the upside this year.
One of the key copper trends in 2017 has been supply disruptions. The strike at BHP
Billiton’s (ASX:BHP,NYSE:BHP,LSE:BLT) Escondida, the largest copper mine in the
world, and the suspension of concentrate exports from Freeport-McMoRan’s
(NYSE:FCX) Grasberg, the world’s second-largest copper mine, kept the markets
nervous.
“A higher-than-usual level of supply disruptions, coupled with slightly better-than-
expected Chinese demand due to the property sector slowdown have resulted in a
tighter market than we expected,” Norton said. She still expects a surplus for the year,
albeit a relatively modest one.

Another factor supporting prices was the news that China would limit copper scraps
imports. “In our view, however, it was an excuse rather than a reason for the rally” in the
second half of the year, Norton added.
For Smith, China’s strong economic activity, a weaker US dollar and supply constraints
supported by Escondida’s strike and Grasberg’s permit issues were the main price
drivers. “[But] the biggest single news in the industry this year has been the idea that
the electric vehicle market in China will take off soon and that it will as a result
potentially increase demand in copper as well as other metals,” he said.
Copper outlook 2018: Supply and demand dynamics
Although speculation was one of the factors driving prices higher this year, paying
attention to copper fundamentals is key to understanding how the base metal will
perform in 2018.
In terms of supply, Norton is expecting a sharp pick up in production next year that will
smooth out this year’s bumpy ride. “Driving this in terms of mine production will be the
restart of Glencore’s (LSE:GLEN) idled capacity in Africa after a more sedate 2017,”
she said.
Norton added, “Peru will grow more strongly again in 2018, helped by the expansion at
Southern Copper’s (NYSE:SCCO) Toquepala, while First Quantum Minerals
(TSX:FM,NYSE:FQM) will bring its Cobre de Panama mine onstream.”
That said, China will play a key role in refined production as smelter capacity growth
picks up pace. “Glencore’s idled capacity in the Democratic Republic of Congo that is
due to restart encompasses an SX-EW operation producing cathode, and so will also
contribute to the bottom line,” Norton explained.
Looking over to demand, Norton expects consumption in China to continue to increase
next year, but at a slower rate than in 2017. Similarly, Smith expects an uptick in
Chinese demand, although it will still be lower than what has been seen in the past
five to 10 years.
US demand has been largely disappointing this year, according to Norton, but prospects
may be slightly brighter next year if copper benefits from any trickle down from higher
infrastructure spending.
Elsewhere, Norton expects India and Brazil to be bright spots next year. “Growth rates
are expected to pick up helped by the ‘Make in India’ campaign and plans for new smart
cities,” she said, adding that several companies in India have plans to boost their
downstream copper capacity in the coming years.

Smith also expects demand in emerging markets to do well, but he forecasts that
demand from Europe will be strong next year as well, as several sectors have picked
up.
In terms of stockpiles, Norton sees stocks increasing as production picks up next year.
With that in mind, she doesn’t expect a deficit until 2020 to 2021, when the lack of new
mine supply starts to bite.
“However, we do see dwindling surpluses in the run up to that, which are sufficiently
modest to propel prices higher from the latter part of next year onwards,” she added. In
fact, GFMS is expecting a larger surplus next year on the order of 300,000 tonnes.
Meanwhile, Smith anticipates a drawdown in stockpiles next year. “That is mainly
because we are generally optimistic about the macro story, with strong demand from
China and globally,” he said, adding that he expects the copper market to be in deficit
next year and for that to continue for awhile.
Copper outlook 2018: Key factors to watch for
As the new year starts, investors should keep an eye on several catalysts that could
impact copper.
Norton mentioned Glencore’s restart plans and other possible restarts if prices stay high
as key to watch out for in the new year. Supply disruptions due to weather conditions
and labor negotiations in top copper-producing countries Chile and Peru will also be
crucial to pay attention to.
“[It is also] worth keeping a watch on developments at Grasberg with regard to
ownership and the concentrate export permit,” she said, adding that China’s scrap
import issue could also end up having a more far-reaching impact than expected next
year.
Looking over to demand, Norton suggested keeping an eye out for China’s real estate
sector and global economic growth.
In terms of prices, she expects copper to pull back from the current elevated levels. She
sees the decrease coming as it becomes clear that tight supply will not be an issue at a
time when the slowdown in China’s real estate sector is kicking in on the demand side.
“We assume prices will start to pick up again in the latter part of 2018 and into 2019, but
that may come sooner if concerns over the looming supply deficit override ‘shorter-term’
fundamentals,” she added.

Despite expecting a deficit in the market next year, Smith said that doesn’t necessarily
mean prices will go up. In fact, they could actually pull back from the high levels seen
right now. He noted that the optimism that supported the rally in copper this year was a
bit “overdone.”
Oxford Economics is calling for copper prices to average $5,997 next year, and expects
them to trade higher in the first half of the year and pull back at the end of 2018.
Meanwhile, firms polled by FocusEconomics estimate that the average copper price for
2018 will be $6,289. The most bullish forecast for the year comes from Pezco, which is
calling for a price of $6,289; meanwhile, Liberum Capital is the most bearish with a
forecast of $4,960.

Copper Forecast 2018: CEOs Bullish on
Market
Execs from NorthIsle Copper and Gold, Astorius Resources,
Western Copper and Gold and Carube Copper share their
copper forecast for 2018.
This time last year, many market
participants were cautiously optimistic
about copper in 2017. But the base
metal has performed better than
expected, surging more than 18 percent
year-to-date.
To learn more about what companies
forecast for the copper market in 2018, the
Investing News Network reached out to
company executives and CEOs in the
space.
Jack McClintock, president, CEO and director of NorthIsle Copper and
Gold (TSXV:NCX); Jason Powell, investor relations manager of Astorius
Resources(TSXV:ASQ); Paul West-Sells, CEO of Western Copper and
Gold (TSX:WRN); and Jeffrey Ackert, president and CEO of Carube
Copper (TSXV:CUC), were able to provide insight.
Copper forecast 2018: Copper is the commodity to watch
As mentioned, copper has trended up since the start of the year. Prices rallied in the
fourth quarter, breaking the $7,000-per-tonne mark, and have been trading at around
that level since then. As a result, many experts remain bullish on the red metal for the
months ahead.
Speaking about copper in 2017, Astorius’ Powell said it has been a great year so far for
metals, and noted that he expects copper to end the year strong. “We have been very
pleased with the performance of copper since the economy has been strong, and it has
had an impact on the copper price,” he said.
Similarly, Western Copper’s West-Sells said it has been an exciting time in the copper
space. He believes that at this rate of price increase, copper could reach $3.20 per
pound before the year ends.

“There are some fundamental reasons for why copper is as strong as it is. These
include reasonable demand from China, the US and Europe and, more importantly, the
current level of supply,” he noted, explaining that there’s a dearth of supply due to a lack
of new mines.
“Investors and speculators are aware of this and, as a result, the price of copper is
rising in anticipation of the need for a larger supply, which necessitates higher copper
prices,” West-Sells added.
Meanwhile, NorthIsle’s McClintock said the market this year performed largely as
he expected, but short of what he had hoped for, as investors are still not interested in
the junior sector. “I hope that will change as the producers begin to post strong profits
over the next two quarters,” he said.
Looking ahead to next year, Astorius’ Powell believes copper will remain one of the top
commodities to watch. “The economy is very strong and this will have an impact on
copper as a commodity,” he added.
NorthIsle’s McClintock also expects to see an improvement over the next two quarters,
and a recovery in 2018. For that reason, “now is the time to be accumulating shares in
the junior resource market.”
For his part, Carube’s Ackert said he is very bullish on copper prices due to strong
demand for copper in the form of the electrification of vehicles. “It’s the junior explorers
that are taking the risk at this point … to find the new deposits that will feed this demand
and enable consumers for 10 years, 20 years, 30 years down the road. I think we’re in a
good space at a very good time,” he commented.
Copper forecast 2018: What’s ahead for companies
As the year comes to a close, the executives shared their highlights from 2017
and commented on catalysts to look forward in the year ahead.
In 2017, Astorius Resources announced a $1-million financing in October, which was
completed in November and oversubscribed. “[Moving forward,] we are well financed
and acquired a new project in Argentina, the Taca Taca West project. We also have the
Condor copper-gold property in Ecuador next to Lundin Gold’s (TSX:LUG) Fruta del
Norte world-class gold discovery, [which is] going into production in 2020,” Powell said.
Meanwhile, NorthIsle Copper and Gold completed a preliminary economic assessment
at its North Island copper-gold project with positive results this year. “[In 2018,] we plan
to drill the blue sky targets on our project, and any one of these could be a game
changer,” McClintock said.

For its part, Western Copper is focused on developing its Casino project in Canada’s
Yukon territory. One of the major highlights in 2017 was the announcement from the
federal government of a $360-million infrastructure package to develop roads that
access Casino.
“What is particularly exciting for Western and its shareholders is that approximately
$130 million of that package will go directly to roads providing access to the Casino
project,” West-Sells said.
Lastly, Carube Copper has been focusing on its drilling program at Bellas Gate project
in Jamaica. “In terms of what’s happening next, within our 11 licenses there are two
licenses that we want to prepare for drilling. We may not get to the drill stage this year,
but we expect to do some basic exploration work, including ground geophysics and soil
geochemistry,” Ackert added.

Zinc Trends 2017: Prices at Decade High
After Supply Crunch
What zinc trends rocked the market in 2017? We run through
what happened to the metal this year, from production cuts
to falling stockpiles.
Zinc prices have surged more than 24
percent this year on the back of production
cuts, falling stockpiles and a weaker US
dollar.
In fact, the base metal hit a 10-year high in
August, breaking the $3,000-per-tonne-mark.
As the year comes to a close, the Investing
News Network is looking back at the main zinc
trends this year, from surging prices to
declining warehouse inventories.
Read on to learn what happened in the zinc market in 2017, from the key supply and
demand dynamics to how analysts thought the market performed in every quarter.
Zinc’s price performance from January 1, 2017 to December 4, 2017. Chart via Kitco.

Zinc trends Q1: Production cuts and smelter charges
During the first three months of the year, zinc prices gained more than 4 percent on the
back of supply worries. Zinc mine output dropped significantly in 2016, largely due to
the closure of MMG’s (HKEX:1208) Century mine and Vedanta Resources’ (LSE:VED)
Lisheen mine; Glencore’s (LSE:GLEN) 500,000-tonne reduction in annual mine capacity
was also a factor.
In Q1, this shortfall appeared to emerge in the refined zinc market. Lower zinc mine
supply pressured smelters to decrease treatment charges — the fees they charge to
process ore into zinc — to historic lows of around $30 a tonne. As a result, some
smelters were forced to cut refined zinc production.
“Everyone is scratching around for mine supply. The winners are the guys who mine the
stuff, the big diversifiers. The losers are the zinc smelters who are fighting for
concentrates,” noted analyst Daniel Morgan of UBS (NYSE:UBS) at the time.
Also in the news was a strike at Noranda Income Fund’s (TSX:NIF.UN) processing
facility in Quebec. It is the biggest in Eastern North America, and the strike increased
worries about refined zinc supply.
Overall, analysts were bullish on zinc at the beginning of 2017, as it was the best-
performing LME metal the previous year. “I could easily see prices getting up to $1.50
or $1.60 this year and continuing the enthusiasm that we got last year,” Brien Lundin,
CEO of Jefferson Financial, said back in January.
Similarly, Andrew Thomas, senior analyst – zinc markets, at Wood Mackenzie, was also
bullish on zinc. “It’s become very difficult to derail the zinc story,” he said earlier this
year. “A recession would do it, possibly,” he added, “but it would delay it rather than
wholly derail it.”
During the first quarter, zinc traded between $2,529 and $2,970.
Zinc trends Q2: Supply worries rise as stockpiles fall
Zinc prices increased almost 2 percent in the second quarter of the year, despite falling
to their lowest level this year in June, when prices touched $2,434.
Declining stockpiles and supply worries supported prices during the period. In fact,
orders to withdraw zinc from LME stockpiles jumped 10 percent, to the highest level in
three years, SP Angel analysts said in a June note. As the quarter ended, stockpiles
touched their lowest level since 2009.
Keeping an eye on stockpile levels is important for zinc-focused investors, as they show
how much zinc is readily available to end users. “Inventory [levels] can swing market

balance and, to some extent, prices too,” CPM Group commodity analyst Yvonne
Li explained in May.
Some market watchers were expecting zinc stocks to continue to fall this year. For
example, in May, Wood Mackenzie’s Jonathan Leng said that he was expecting to see
acute tightness in the zinc market later this year, with stocks “projected to fall to
historically low levels and remain so until 2020.”
Geopolitical tensions during the first half of the year pressured zinc, with investors
turning to safe-haven assets like precious metals and moving away from riskier assets,
such as base and industrial metals.
During the second quarter, zinc traded between $2,434 and $2,776.
Zinc trends Q3: Prices hit decade high
Zinc prices hit their highest level in 10 years in August, breaking the $3,000 mark,
and have traded above that level since then. Supply concerns, a strong demand outlook
from China and a decline in warehouse inventories supported the price rally.
“Improving demand sentiment has been fueled by a resurgence in Chinese economic
growth. However, we continue to look to supply as the primary driver underpinning
increasing zinc prices,” Cormark Securities mining equity research analyst Stefan
Ioannou said at the time.
During the quarter, China started to strictly monitor its domestic production of the metal.
Environmental inspectors targeted zinc mines in Sichuan province, restricting or
stopping some production, which increased supply worries.
Another factor impacting prices was the ease in geopolitical tensions. As a result,
investor sentiment switched to risk-on.“When geopolitical tensions increase again we
would expect zinc prices to be impacted, along with the rest of the LME metals,” CRU
analysts commented in August.
During the period, analyst John Kaiser of Kaiser Research explained that zinc
prices had the potential to soar as a result of China’s environmental awakening.
Similarly, Hard Rock Analyst Editor Eric Coffin said he was bullish on the base metal for
the rest of the year.
During the third quarter, zinc traded between $2,736 and $3,215.

Zinc trends Q4: All eyes on mine production
As mentioned, zinc prices have continued to trade above $3,000 since August. Q4 price
drivers included global supply worries, China’s environmental crackdown and a weaker
US dollar. Output cuts in other key zinc-producing countries have also pushed prices
higher.
“Additionally, reports of declining inventories and the latest demand forecast for the
commodity suggests that the market will remain tight for the foreseeable future,”
analysts at FocusEconomics said in their latest commodities report.
Another sign that the zinc market is tight are the low levels for treatment charges —
those indicate that concentrate supplies are thin, Robin Bhar, head of metals research
at Societe Generale (EPA:GLE), recently commented. “I still think prices need to stay at
this level to get more supply. Spot TCs are still low, they haven’t picked up, so there’s a
need to incentivise more supply,” he added.
During the last quarter of the year, zinc has been trading between $3,129.50 and
$3,369.50.

Zinc Outlook 2018: Will Prices Continue
to Rally?
What's the zinc outlook for 2018? Analysts predict another
great year for the base metal, which reached multi-year highs
in 2017.
Zinc prices trended upward in 2017, and
have now surged more than 21 percent
year-to-date. Luckily for fans of the base
metal, many analysts remain bullish for
2018.
Supply concerns have hit the refined zinc
market in recent months, with
prices reaching a decade high in August
and continuing to trade above the $3,000-
per-tonne level since then. As of Monday
(December 11), LME zinc was changing hands at $3,092.
Read on to learn more what experts expect in terms of the zinc outlook next year, from
supply and demand to potential price catalysts. All in all, the year looks set to be a good
one.
Zinc outlook 2018: Price performance
In 2016, zinc was the best-performing LME metal, jumping more than 64 percent in 12
months. In 2017, zinc continued to climb, but at a slower pace; as mentioned, it’s gained
over 21 percent since January.
As the chart below from Kitco shows, zinc’s highest point of the year came in October,
when it hit a more than decade high of $3,369.50. Supply worries and a strong Chinese
demand outlook supported the base metal’s rapid price rally.

Chart via Kitco.
The lowest point of the year for zinc came in June, when prices were trading at $2,435.
A stronger US dollar and risk aversion due to geopolitical tensions turned investors
away from the base metal.
One of the key zinc trends this year has been the depletion of zinc stocks built up over
the past 10 years; they have run out due to mine closures and cutbacks.
According to CRU Group, that led to a deeper refined zinc metal deficit and to
a drawdown in global stocks. “We correctly forecast physical market tightening, but the
strong price reaction came sooner than we were expecting,” analysts at the firm said.
Similarly, CPM Group (HKEX:1932) commodity analyst Yvonne Li said that the
tightness in the physical market was the main factor supporting significantly higher zinc
prices this year. “[It] lasted longer than I had expected,” she added.
For his part, Junior Stock Review founder Brian Leni said that while he was expecting
higher zinc prices in 2017, that didn’t translate into gains for the junior zinc stocks as he
had estimated. “Companies with quality projects haven’t received much attention and,
for the most part, have traded sideways in the second half of 2017,” he commented.
Zinc CEOs have also identified this problem.
Zinc outlook 2018: Supply and demand dynamics
As mentioned, zinc prices have remained high in 2017, supported largely by supply-side
factors.

According to the International Lead and Zinc Study Group, global refined zinc metal
production is forecast to fall by 1.4 percent this year, to 13.53 million tonnes. However,
next year the group predicts an increase of 3.9 percent, to 14.06 million tonnes.
That said, CRU Group analysts expect around 775,000 tonnes of new zinc mine supply
to come onstream next year, with MMG’s (HKEX:1208) Dugald River mine and
Vedanta’s (LSE:VED) Gamsberg mine being notable contributors to production.
Aside from those projects, Li expects East Siberian Metals’ Ozernoye field project and
Mehdiabad mine to bring new production between 2018 and 2022. “These are expected
to help significantly ease the tightness in the refined zinc market during the later years
of the forecast period,” she said.
Despite those additions, CRU Group analysts believe global zinc stocks will continue to
be rapidly drawn down in the first half of 2018, although this depletion will slow down in
the second half of the year.
“Combined exchange zinc stocks at LME-registered and SHFE-registered warehouses
could rise probably in the second half of 2018,” said Li, explaining that this will be a
consequence of refined supplies rising and demand growth underperforming due to a
slowdown in China’s economic growth.
“[That’s because] the government [will] rein in its debt problems while tackling pollution.
However, because of the sheer size of the Chinese market, demand will increase but at
a slower pace,” she added.
Similarly, CRU Group analysts expect Chinese zinc demand to grow next year, but at a
slower rate. “High prices will also begin to constrain demand growth next year in China
and elsewhere,” they added.
Outside of China, Li expects demand in the US and Europe to increase next year as
industrial activities in both economies continue to gather pace.
With all that in mind, analysts forecast that the refined zinc market will remain in deficit
in 2018. CRU Group estimates that the deficit will moderate from this year’s 750,000
tonnes to around 200,000 tonnes. Meanwhile, CPM Group expects the refined zinc
market deficit to reach 400,000 tonnes in 2017, but come off to approximately 220,000
tonnes in 2018.
Zinc outlook 2018: Key factors to watch
As the new year starts, investors should keep an eye on several catalysts that could
impact the zinc market. CRU Group analysts mentioned Glencore’s (LSE:GLEN) mine
output and the price-related response of Chinese mine supply as major factors that
could potentially impact the market.

“Moving into next year, with concentrate stocks exhausted, the degree of the seasonal
winter slowdown in Chinese mine supply will be crucial in determining … refined metal
market tightness,” they added.
Similarly, Li suggested that investors watch winter capacity cuts in China, which depend
on pollution levels and how local governments carry out the winter cuts. “Our base case
is that the winter cuts will happen, and will provide strong underlying support to prices in
the next couple of months,” she explained.
Looking ahead, zinc prices are on track to climb even higher in 2018 than they were this
year. “On an annual average, basis zinc prices could rise to $2,904 this year and $3,154
in 2018,” said Li.
Leni also remains very bullish on zinc, and expects the metal to continue to head toward
$2 per pound, supported by falling global inventories, Chinese mine closures and stable
steel market demand.
However, he noted that investors should watch if Glencore decides to bring its 500,000
tonnes of production back online. “While Glencore’s tonnes wouldn’t hit the market
overnight, I do believe the news would resonate quite quickly, sending at least a
temporary downward spike in the zinc price,” he noted.
Meanwhile, firms polled by FocusEconomics estimate that the average zinc price for
2018 will be $3,009. The most bullish forecast for the year comes from TD Economics,
which is calling for a price of $3,362; Danske Bank (CPH:DANSKE) is the most bearish
with a forecast of $2,650.
For investors interested in zinc stocks, there are many zinc-focused companies to keep
an eye on next year. According to Leni, some of them include Adventus Zinc
(TSXV:ADZN), Solitario Zinc (TSX:SLR), Tinka Resources (TSXV:TK) and Vendetta
Mining (TSXV:VTT).
However, he warned investors that “in a rising zinc price environment, many junior
companies will boast a focus or exposure to zinc. More than ever, it will be paramount
to do your due diligence.”

Zinc Forecast 2018: Companies Weigh In
Execs from Rokmaster Resources, Nevada Zinc, Canadian
Zinc, Heron Resources and Canada Zinc Metals share their
zinc forecast for 2018.
Many analysts predicted 12 months ago
that zinc was set to shine in 2017, and
the base metal has lived up to
expectations.
Zinc prices rallied in Q3, breaking the
$3,000-per-tonne mark, and have held
above that level since then. With that in
mind, the Investing News Network reached
out to a number of companies in the zinc
sector to get their thoughts on what’s ahead
for the base metal in 2018.
John Mirko, president and CEO of Rokmaster Resources (TSXV:RKR); Bruce Durham,
president and CEO of Nevada Zinc (TSXV:NZN); Steve Dawson, CEO of Canadian Zinc
(TSX:CZN); Wayne Taylor, managing director and CEO at Heron
Resources (ASX:HRR); and Peeyush Varshney, CEO, chairman and president of
Canada Zinc Metals (TSXV:CZX), were able to provide insight.
Zinc trends 2017: Supply constraints hit the market
Zinc was the best-performing LME metal in 2016 after surging almost 65 percent that
year. At the beginning of 2017, many market participants were expecting the base metal
to continue to shine on the back of supply constraints.
“I expected the metal markets to continue to tighten as the world economy continued to
grow, [with] mineral supply [shrinking] due to several closures and few new discoveries
coming onstream,” Rokmaster’s Mirko said. Meanwhile, Nevada Zinc’s Durham said he
expected tighter inventories and higher prices for commodities, but in particular for zinc.
Canada Zinc Metals’ Varshney also said he expected “LME zinc inventories to continue
to decline and the price of zinc to continue its upward trajectory in response to the
demand/supply imbalance.”
For his part, Canadian Zinc’s Dawson was hoping that the junior mineral exploration
and development market would improve. Heron’s Taylor was also expecting an
improved investment market for commodities with strong fundamentals such as zinc.

But not everything was bright for zinc in 2017, with the market facing some challenges
on the investment side. Heron’s Taylor said investment in zinc projects remained
“erratic,” adding, “the equity financing markets have continued to be volatile, and it
proved challenging to get the timing right.”
He continued, “commodity markets have generally been good; however, the investment
market has been patchy — good interest from private equity groups, tempered interest
from institutional funds and retail has piled into all things battery related.”
Nevada Zinc’s Durham mentioned that one of the most challenging aspects of the
market was to get investors interested in the zinc story. Canadian Zinc’s Dawson
agreed, saying that “trying to explain why even though commodity prices were up,
equities [were lagging]” was challenging this year.
Mirko of Rokmaster also noted that the zinc market was challenged by difficulties in
determining stocks and supply from China, the world’s top zinc-producing country.
Zinc forecast 2018: Supply tightness to continue
As the start of 2018 approaches, CEOs remain positive about the future of zinc
fundamentals and prices.
“[Next year,] the zinc market is expected to continue to tighten and sustain the price as
the global economy continues to strengthen,” Rokmaster’s Mirko said.
Another important factor investors should keep an eye on next year are declining
stockpiles, as they show how much zinc is readily available to end users. “Stock trends
for zinc continue to strongly point to a tighter market, which should support the price,”
Heron’s Taylor said.
Similarly, Canada Zinc’s Varshney expects zinc supply to continue to decrease in 2018.
“I remain very bullish on zinc and expect it will continue to be one of the leaders in the
base metals sector,” he added.
For investors new to the zinc space, Rokmaster’s Mirko suggested focusing on
investing in companies with 100-percent ownership of solid properties in good locations,
and with experienced management.
Meanwhile, Canadian Zinc’s Dawson suggested investors look at companies that are
either developing assets or in production. “Zinc exploration projects, while interesting,
will not be able to catch the cycle and profit from peak metal prices,” he added.
For his part, Heron’s Taylor said investors should do their homework on the commodity
fundamentals, which include basic supply/demand dynamics and stocks. “I think
objectively you still come out with zinc being the best placed for the near term,” he
commented.

Zinc forecast 2018: What’s ahead for companies
As 2017 comes to an end, the CEOs shared some of their companies’ main
highlights this past year and commented on what zinc-focused investors should expect
from them moving forward.
Mirko said Rokmaster hit several milestones in 2017, including obtaining full ownership
of the Duncan Lake zinc project, adding new new management and finding historic drill
core that was long thought to be lost. The company is expecting “world-class drill
results” in 2018.
Meanwhile, Taylor said that the critical milestone for Heron was attaining full
development financing for its Woodlawn zinc-copper project. “We have traded above
the raising price, and with development progress along with exploration results we
would like to see this trend higher as we approach first production at the end of 2018,”
he added.
For his part, Durham said Nevada Zinc made progress at its Lone Mountain project,
completing a 13-core-hole drill program. “We expect to have our maiden resource
estimate out in Q1 next year, so we see that as a very important [upcoming milestone],”
he said.
In 2017, Canadian Zinc received a recommendation for the approval of an all-season-
road from the Mackenzie Valley review board; the company also delivered a positive
feasibility study. According to Dawson, investors should keep an eye out for
details regarding the financing of the company’s Prairie Creek mine, positive exploration
results and the potential for new business combinations.
Lastly, Varshney said Canada Zinc Metals “will consider putting out an updated
resource calculation to include this season’s drill results and [will commence] a
preliminary economic assessment on the Cardiac Creek deposit on the flagship Akie
Property.”

Nickel Trends 2017: Deficit Expected on
Supply Challenges
What trends drove nickel prices in 2017? We run through top
supply, demand and price catalysts in this overview of the
space.
At the end of 2016, nickel was trading at
$10,010 per tonne, and many market
watchers were anticipating higher
prices in the face of rising demand and
short supply.
What actually happened to prices and why?
As 2017 comes to a close, the Investing
News Network is looking back at the main
trends in the nickel space this year,
from issues in top nickel-producing
countries to electric vehicle optimism.
Read on to learn what happened in the nickel market in 2017, and what market
participants had to say during each quarter of the year.
Nickel trends Q1: Major nickel producers affected
The year began with the Indonesian government announcing plans to loosen a ban on
nickel ore exports. While nickel pig iron production declined in China in 2016, the
International Nickel Study Group (INSG) said recently that Indonesia’s move could lead
to increased output in 2017. It also sees nickel pig iron production increasing in
Indonesia itself this year as new projects ramp up.
In February, nickel prices hit a three-week high after Regina Lopez, the Philippines’
acting environment secretary, ordered the closure of over half the country’s mines due
to environmental concerns. The Philippines is the top producer of nickel, and when
Lopez failed to secure a permanent government position, prices for the metal fell on
concerns that mines in the country could come back online.
Nickel trends Q2: Prices fall on weak demand from China
Andrew Mitchell, Wood Mackenzie’s principal nickel analyst, said Chinese stainless
demand weakened in Q2, and “we saw many plants cut production.” At the start of

June, prices reached an 11-month low of $8,700, leaving them down over 10 percent
year-to-date. “That situation [in China] was in reverse by late June, and since then
Chinese stainless production has ramped up quite strongly,” he added.
Low nickel prices have affected even major miners this year. In fact, midway through
the year, Brazil’s Vale (NYSE:VALE) said it was reviewing its New Caledonia
operations. Spokesperson Cory McPhee told Reuters at the time, “[t]he nickel price
today is languishing at around $9,000 a tonne with no indication of recovery in the near-
term. This has forced us to reassess all areas of the nickel business, including our
operations in New Caledonia, which continue to lose money at these prices.”
Commenting on the current nickel price environment, Brian Leni, founder of the Junior
Stock Review, said, “current nickel spot prices leave 25 percent of the nickel producers
in negative cashflow. If this trend continues, producers will go out of business and
supply will fall further. A rise in the nickel price isn’t necessarily imminent, but it’s
inevitable.”
Nickel trends Q3: Growing battery demand
As the year continued, nickel began to receive increasing attention for its role in lithium-
ion batteries, which are used to power electric vehicles. Some lithium-ion battery
manufacturers said they are looking for ways to reduce the amount of cobalt used in
these batteries in order to cut costs.
In fact, in August, Korean firm SK Innovation (KRX:096770) began commercial
production of mid- and large-sized lithium-ion batteries composed of 80 percent nickel,
10 percent cobalt and 10 percent manganese. That’s compared to the typical lithium-ion
battery ratio of 60 percent nickel, 20 percent cobalt and 20 percent manganese. This
and other developments excited market participants, though overall most experts agree
that electric vehicle demand is still only a minor nickel price driver.
In its October Commodity Price Index, Scotiabank notes that “a gradual reduction of
nickel inventories is forecast to put soft upward pressure on prices, which are expected
to average $4.65 per lb in 2017.” However, Rory Johnston, commodity economist at
Scotiabank, noted, “if you see more and more enthusiasm for nickel on the back of
rising forecasts for electric vehicle sales for instance, you could see nickel rise faster
than that outlook.”
Nickel trends Q4: Price hits over two-year high
On November 1, nickel prices reached $13,030, their highest level since June 2015, on
further anticipation of electric vehicle demand.
Mitchell commented, “excited discussions around LME week sent the [nickel] price
soaring — rising almost 10 percent during the course of a week — even though the EV
story is a longer-term driver.” The INSG notes that electric vehicle demand will

represent just 3 percent of nickel demand in 2017 compared to the two-thirds of supply
that goes toward stainless steel.
Later in the month, the Philippines Mines and Geosciences Bureau reported that only
17 of the country’s 30 nickel mines recorded output in the first nine months of the year,
resulting in an 11-percent drop in output. The country’s president said he will uphold the
ban on open-pit mining introduced by Lopez despite a recommendation that it be lifted.
The government is also reviewing whether closed mines will be eligible to reopen
and has said it plans to finish the review by the end of 2017.
Nickel prices were at $11,230 as of December, which was 12 percent lower month-on-
month. However, prices were up 12.7 percent on a year-to-date basis, and were 0.7
percent higher than on the same day of last year. FocusEconomics explains in its latest
report that prices fell on increasing supply from Indonesia as well as weaker demand
from China after a period of restocking and measures taken to curb pollution in the
country. China’s cooling housing market is also expected to exercise downward
pressure on nickel demand and prices since nickel is used in steelmaking.
Nickel trends: 2017 takeaway
Commenting on the nickel space as a whole in
2017, Mitchell said, “we expect the market to be in
deficit for the year, with prices averaging around
$10,400. But this average hides the fact that prices
will have risen from $9,981 in January to currently
$12,800 at the beginning of November, a spectacular
28-percent rise and [nickel’s] highest level for nearly
18 months.”
The INSG is also predicting a market deficit for 2017.
In its latest update, the organization said world
primary nickel production was 1.991 million tonnes in
2016, and it is projected to increase to 2.052 million
tonnes in 2017. Meanwhile, world primary nickel
usage was 2.037 million tonnes in 2016, but should
increase to 2.15 million tonnes in 2017.

Nickel Outlook 2018: Price Gains and
Growing Battery Boom
What's in store for nickel in 2018? Experts share their nickel
outlook, pointing to price improvement and increasing
demand from the battery space.
The nickel market is expected to be in
deficit in 2017, with prices averaging
around $10,400 per tonne. But what’s the
nickel outlook for 2018?
According to Andrew Mitchell, principal nickel
analyst at Wood Mackenzie, next year will
likely bring another deficit and an average
annual price of $11,000.
“There is unlikely to be any new project development during 2018, although there is no
question that the electric vehicle hype has rejuvenated interest in nickel as a
commodity. Our view is that the market will be in deficit, and that on average prices for
2018 will be higher than the average for 2017,” he said in conversation with the
Investing News Network.
Other firms have similar views. In FocusEconomics‘ latest report, panelists said they
see benchmark LME nickel prices averaging $11,111 in Q4 2018. For the year as a
whole, they gave a maximum price forecast of $13,349 and a minimum price of $9,800.
Meanwhile, Scotiabank is calling for an average nickel spot price of $5 per pound, up
from $4.65 in 2017. It notes that “high inventories have insulated the market from the
growing supply deficit, though we see gradual gains through the forecast horizon.” Read
on to learn more about the nickel outlook for 2018.
Nickel outlook 2018: Supply
Macquarie (ASX:MQG) believes that while the nickel market is currently in
deficit, supply is set to rise. The bank predicts that Chinese nickel pig iron output
could jump to 500,000 MT in 2018, up from 407,000 MT in 2017, due to the loosening of
Indonesia’s ban on raw ore exports. Meanwhile, Indonesia’s nickel pig iron production
could rise to 240,000 MT in 2018 up from 90,000 MT in 2016.
Speaking to Bloomberg in November, Ian Roper, head of international business at
Shanghai Metals Market, said, “looking forward we’re very concerned about this vast

flood of nickel ore.” He expects the increase in supply to outpace battery developments,
making it difficult to be “fundamentally bullish.”
That said, supply cuts are being made elsewhere. Mitchell said “the reconfiguration of
Vale’s (NYSE:VALE) Canadian assets and the future of its New Caledonia operation …
will be interesting to watch.” Vale recently announced plans to reduce its nickel output
by 15 percent in 2018; the company also noted that it continues to search for an
investor for its New Caledonia nickel mine.
For his part, Junior Stock Review founder Brian Leni said investors should watch the
actions of Philippines closely. The country’s new president is currently deciding whether
to uphold a ban on open-pit mining; he is also determining whether suspended
mines should come back online.
Leni noted that investors should “watch for continued drops in [nickel] inventory levels,
as it’s my guess that the Philippine government will move forward with its decision to
ban or partially ban nickel ore exports.” He said FPX Nickel (TSXV:FPX), a company he
owns shares in, is one stock to watch.
Nickel outlook 2018: Demand
According to the International Nickel Study Group, electric vehicle demand will
represent just 3 percent of nickel demand in 2017 — that’s compared to the two-
thirds of supply that goes toward stainless steel.
However, as the popularity of electric vehicles continues to grow, the sector is expected
to account for an increased amount of nickel demand. That’s because the lithium-ion
batteries that power these cars require nickel, and could need increasing amounts of
the metal in the future. In fact, analyst Lachlan Shaw of UBS
Group (NYSE:UBS) recently told Bloomberg that by 2025 batteries will account for
500,000 to 600,000 tons of demand per year; current annual nickel demand stands
at 2.1 million tons.

Graphic via Visual Capitalist.
Predictions like that have excited nickel market watchers in recent months, but it’s worth
noting that only about half of the world’s nickel supply will be suitable for use in lithium-
ion batteries. These batteries can only use a high-purity form of the metal known as
Class 1. As Andrew Miller of Benchmark Mineral Intelligence, explained, “you need that
Class 1 nickel to go into the battery industries, and that’s a smaller segment of the total
nickel market.”
Demand for this high-purity form of nickel is forecast to increase by 50 percent by
2030, reaching 3 million MT, Saad Rahim, chief economist at Trafigura Group, recently
told Bloomberg.
Currently, some of the largest producers of higher-grade nickel ores include major
miners BHP Billiton (NYSE:BHP,ASX:BHP,LSE:BLT), Norilsk Nickel (MCX:GMKN),
Vale and Sumitomo (TSE:8316), which are moving to secure supply contracts quickly.
Rory Johnston, commodity economist at Scotiabank, said the market could see, “as
much as 10 to 15 percent of current nickel demand added just from [the electric vehicle
sector] by 2025.”
Why? He explained, “typically you’re seeing more substitution away from rarer minerals
into more available minerals like nickel, which, unlike lithium, has very well-established

financial market products around it. It’s traded on the LME, the Shanghai Futures
Exchange — these exchange listings of futures allow for risk management processes to
emerge around nickel, which has an infrastructure around it that a lot of the other metals
don’t. That is why we generally see a bullish demand outlook for nickel from the battery
space going forward.”
Johnston added that at current price levels, not many firms are building new nickel
mines and, “we’re going to need more nickel than that into the 2020s to fulfill the
demand from this new battery boom.”

Iron Outlook 2018: Experts Say to Watch
China
What do experts see coming for the iron outlook in 2018?
Unsurprisingly, actions taken by China will be key to watch
in the coming year.
Iron ore prices surged in 2016, but in 2017
the base metal performed more
moderately.
According to Scotiabank’s latest Commodity
Price Index, the benchmark 62 percent fines
contract averaged $70 per tonne in 2017.
Prices hit a high of $76.87 on February 21
before steadily declining to a yearly low of
$51.82 on June 9.
The metal recovered through July and August on strong demand from China’s steel
producers, who were anticipating government-ordered production cuts over the winter.
According to a World Bank report, supply shortfalls in Australia and Brazil also put
upward pressure on iron ore prices in the summer.
On September 5, iron ore prices hit $74.03, and then began falling on an anticipated
slowdown in Chinese steel production and increasing supply. Prices reached $57.25 on
October 11.
Iron ore prices rose through November, and as of December 20 prices were sitting at
$70.45. FocusEconomics attributes the recent surge to soaring prices for steel; steel
supply is being squeezed by the Chinese winter production cuts mentioned above.
Iron outlook 2018: Shift to better feedstock
As this year’s iron ore price action shows, China’s steel production cuts have had a
major impact on the market. In total, steel mills in 28 Chinese cities have cut their blast
furnace output by as much as 50 percent to meet air pollution targets set by the
government to reduce smog over the winter.
At the same time, mills have begun paying a premium almost five times higher than two
years ago for high-quality ore in order to boost margins and comply with government
environmental regulations.

Mark Morabito, chairman and CEO of Alderon Iron Ore (TSX:IRON) said in a December
release, “China’s bid to reduce harmful emissions is driving an increase in domestic
steel mills switching to high-grade iron ore products with fewer impurities.” He believes
the company’s Kami project in Canada’s Labrador Trough “is now well positioned to
progress into development” due to those developments.
Reuters notes that Vale (NYSE:VALE), Rio Tinto (NYSE:RIO,ASX:RIO,LSE:RIO), BHP
Billiton (NYSE:BHP,ASX:BHP,LSE:BLT) and Fortescue Metals Group (ASX:FMG)
control about 70 percent of the world’s seaborne iron ore market. They too have been
focusing on high-quality iron ore.
For example, Fortescue said in November that it will aim to deliver over half of its output
with over 60 percent iron content, higher than its current iron content of 58 percent. The
company initially thought Chinese demand for higher-quality ore would be temporary,
but after seeing the discount for its lower-quality products widen by about 31 percent
during Q1 2017 it seems to have reconsidered.
Meanwhile, Vale is shifting its focus to high-grade deposits in Northern Brazil’s Amazon
region. CEO Fabio Schvartsman also said recently that his company is prepared to
unleash up to 50 million MT of spare capacity to balance the market if prices get too
high. He is concerned that if iron ore rises too high inefficient producers will come back
to the market, risking a repeat of past excesses that led to $1 trillion in value
destruction.
Iron outlook 2018: Price predictions
Iron ore prices are expected to average $60 in 2018, according to Scotiabank. Similarly,
FocusEconomics predicts that iron ore prices will fall by the end of 2018 “amid ample
supply after inventories are restocked.” Panelists polled by the firm see prices averaging
$58.70 in Q4 2018.
However, the highest forecast was $66.90 and the lowest was $51, “signaling a large
degree of uncertainty.” FocusEconomics notes that the collapse in steel inventories and
subsequent rise in prices should lead to higher steel output in mid-March, when the
winter production cuts expire.
“A lot will depend on how Beijing focuses and executes on its plan to reduce industrial
capacity in the winter,” Scotiabank commodities economist Rory Johnston explained.
“Everyone will be watching over the next 4 to 6 months to see how much capacity is
actually idled. How much of that capacity is simply kind of shifted westward away from
the major cities as some of the new industrial capacity being built away from cities
comes online,” he added.

Johnston continued, “[a] lot of this is shrouded in statistical shadows and it’s going to
take a little bit of time to figure out exactly what’s happening and whether or not that’s
going to be a repeatable phenomenon every year.”

Lead Outlook 2018: Supply Tightness to
Continue
The base metal had a strong year, but what's the lead outlook
for 2018? Read on to find out what analysts had to say about
the market.
It’s been a strong year for lead prices,
which hit a six-year high in October and
have been trading near the $2,500-per-
tonne-level since then.
This time last year, analysts were predicting
an increase in demand, which was expected
to result in a more balanced market.
However, throughout 2017 the lead market
has remained in deficit, with strong
demand and tight supply pushing prices
higher than many had predicted.
As the year comes to a close, the Investing News Network is looking back at the main
trends in the lead space in 2017 and what’s ahead for prices, supply and demand in the
new year. Read on to learn what analysts and market participants had to say.
Lead outlook 2018: Price performance review
Lead prices have surged more than 24 percent since the beginning of the year on the
back of supply tightness and a weaker US dollar.
As the chart below from Kitco shows, the highest point of the year for prices came in
October, when LME lead hit a six year-high of $2,620. China’s environmental
crackdown along with declining lead stockpiles supported the increase.

Chart via Kitco.
Meanwhile, lead’s lowest point of the year came in January, when prices were trading at
$2,006.50. Geopolitical tensions and a stronger US dollar offset gains for the base
metal during that time.
According to FocusEconomics economist Jan Lammersen, the key trend in the lead
market this year has been a mismatch in supply and demand, with the latter generally
outpacing the former throughout the year. “The underlying fundamentals of the lead
market have been strong this year,” he added.
Similarly, analysts at CRU Group said they correctly predicted the direction of lead
prices this year, but were surprised by the strength of the rally. “[This was] not just a
story of firmer lead industry fundamentals, but also one of broader uplift in metal prices
(including sister mining metal zinc), with lead being pulled up by greater investor interest
in the tightening metals story,” they said.
In terms of demand, robust car sales in China, as well as solid industrial production data
from China, Europe and North America, supported prices. “Demand from producers of
stationary industrial batteries, which use lead, was expected to continue to grow, but
turned out to be subdued,” Lammersen explained.
Looking at supply, “the ongoing environmental crackdown in China, which is aimed at
solving its pervasive pollution problem, led to disrupted supply chains and decreased
Chinese output,” he added.
Lead outlook 2018: Key factors to watch

In 2018, Lammersen expects to see more of the same in the lead market. “Ongoing
tightness in the underlying fundamentals and a mismatch in supply and demand will
continue to support prices,” he said.
In fact, according to the International Lead and Zinc Study Group, demand for refined
lead is forecast to reach 11.82 million tonnes in 2018, while supply will reach only 5.11
million tonnes. As a result, the group expects the base metal to reach a deficit of 45,000
tonnes next year.
CPM Group analyst Yvonne Li also sees the global lead market continuing to
experience a deficit of refined supply relative to fabrication demand through 2018. “The
deficit is expected to narrow to approximately 50,000 MT in 2018 from around 120,000
MT in 2017,” she commented.
She believes investors should keep an eye on secondary lead’s increasing use in
refined lead production. Greater usage of secondary lead for this purpose could help
make up for potential losses in refined supply due to mine closures.
“Globally, secondary lead output accounted for 56.4 percent of total refined production
in the January-to-August period this year; in developed economies, the percentage is
much higher — Germany (68 percent), Spain (100 percent), US (100 percent),” said Li.
She said in China secondary lead is also increasingly being used to produce refined
lead, noting, “in the January-to-September period, secondary lead output accounted for
39 percent, an all-time high.”
Meanwhile, CRU Group analysts believe a key factor to watch next year will be how
polymetallic miners (those mining lead alongside zinc and silver) respond to higher lead
prices and lower treatment charges.
“For now, all eyes are waiting to see if any lead-acid battery-killing weather over the
northern hemisphere winter can lift demand to the point of seeing supplies struggling to
respond,” they added.
Another main topic in the resource sector this year has been the anticipated surge
in electric vehicle (EV) demand, something that could negatively impact the lead-acid
battery market.
But CRU Group analysts believe that for now lead-acid batteries will remain the
dominant force in powering the vast majority of vehicles worldwide, with the first step
toward a global full-EV world being “stop-start” micro HEVs that use lead-acid
batteries. “In short, [we] still see plenty of room for lead-acid battery demand to grow
alongside lithium-ion batteries until well into the next decade,” they said.

With all of that in mind, what still remains to be seen is whether lead prices continue to
increase or if a decrease is just around the corner. “Trends affecting lead prices in the
new year are likely to be carried over from this year; supply levels are expected to
remain low and will be outpaced by demand,” Lammersen said. According to Li, lead
prices are forecast to rise further to an annual average of $2,318 in 2017 and $2,355 in
2018.
Meanwhile, firms polled by FocusEconomics estimate that the average lead price for
2018 will be $2,279. The most bullish forecast for the year comes from Societe
Generale (EPA:GLE), which is calling for a price of $2,700; meanwhile, Euromonitor is
the most bearish with a forecast of $1,945.

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