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Strategists at UOB Group’s Quarterly Global Outlook noted prices of the base metal are seen recovering ground towards the second half of the year.

Key Quotes

“There was no escape from the sharp global growth slowdown. Industrial metals, given their high sensitivity to global industrial activity have started to encounter selling pressure since late January when COVID-19 first broke out in China.”

“Industrial metals are particularly sensitive to China’s manufacturing activity. For a guide of how much further LME Copper may fall, a good indicator may be China’s official Purchasing Managers’ Index (PMI).”

“Before we can countenance a headlong plunge in LME Copper from USD 4,800 to USD 3,000 / MT, we need to appreciate that the Copper demand-supply equation is much tighter now (although demand will start to deteriorate significantly from here on).”

“Overall, we downgrade our LME Copper forecast further and see a risk of a further fall to USD 4,000 / MT in 2Q, before mild recovery to USD 4,300 / MT in 3Q, USD 4,600 / MT in 4Q and USD 5,000 / MT in 1Q21.”