Introducing a packed Simmons & Simmons auditorium to fundamental analysis of the metals markets, Wood Mackenzie’s Clare Eilbeck, Analyst – Aluminium Markets and Eleni Joannides, Principal Analyst – Copper Markets, shared their expertise on many pertinent considerations from demand-consumption and supply, to understanding pricing and market dynamics and the non-fundamental unknowns.
Concentrating on first use consumption, not end use evaluation and assessment of the supply outlook, Clare Eilbeck guided attendees through how to apply Wood Mackenzie’s approach and appreciate its limitations. She described in detail how China’s economic growth is the main risk to every metals market and noted that Wood Mackenzie does not foresee a second wave of global recession.
Addressing an ever topical issue under the aptly put ‘Aluminium – two worlds and then there are warehouses’ introduction, she debated 2011 decision-making and resultant headlines from the London Metals Exchange (LME) and described tools for comparing the LME price and its Shanghai counterpart.
Having covered the basics on the means of analysis and raised many questions relevant to news climates, the presenters turned their attention to copper by explaining why high pricing is favourable for projects but not for consumers. The substitution impact caused by the copper supply deficit (and consequent high copper prices) roused plenty of interest – technological developments led to the move from copper telecom wire to fibre optics rather than price, while the move to plastic tube from copper plumbing tube was a direct reaction to the escalating copper prices – before other opportunities for copper to aluminium substitution were mused on, triggering sympathetic discussion of lead times for research and development.
Having carefully dissected the intricacies of each impacting factor and their compounded complexity, the speakers elected to conclude our meeting on a positive note. Rightly pointing out earlier on in proceedings that metals and mining has largely outperformed many other sectors in the aftermath of the 2009 financial crash – with relatively low risk giving way to increased speculation – this well-balanced, highly comprehensive overview proved to be precisely the master-class it was intended to be.
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