This year’s London Metal Exchange (LME) Week was a subdued affair by comparison with past excess. Put on ice last year due to covid-19, the annual metals party returned in slimmed-down form with many opting for virtual over physical drinks. Analysts were in equally sober mood. Everyone’s still positive on the longer-term energy transition story but more immediately worried about China.
The debt problem faced by real estate developer China Evergrande Group is no Lehman Moment, to quote Bank of China’s head of commodity strategy Amelia Fu, speaking at the LME Seminar. But weakening Chinese property sales spell trouble for what is a big metallic demand driver.
Average copper, nickel and zinc prices will decline next year as slowing demand growth coincides with increased supply, according to research house CRU, summing up the broad consensus among analysts last week.
Unfortunately, no one told the markets, which rudely gate-crashed last week’s proceedings. By Friday’s close zinc had shot up to a 14-year high of $3,944 per tonne and copper was in the grip of the most ferocious squeeze seen in the London market since 1990.
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