With LME Week 2017 just around the corner, we thought we’d take a look back at the predictions our audience made when polled at our annual Metals Seminar 2016 to see how accurate they were. The audience were asked about their thoughts on pricing, metals performance and the challenges facing different aspects of the industry.
Before the start of last year’s base metals panel, which included analysis and debate on aluminium, copper, zinc and nickel, 28% of the audience thought nickel had the most upside potential for 2017. This grew to 50% after industry experts presented their analyses.
Most of our audience last year thought the price of nickel would be up 10% by the end of 2017. Whilst there are still a couple of months to go, 2017 has seen the price of nickel rally as high as $12,120 on 4 September, which is 17% higher than it was at the time of the seminar last year at $10,340 (based on the LME Official Settlement Price established on 28 October 2016). At the time of writing this, the LME Official Settlement Price of nickel is up nearly 8% on where it was at the time of the seminar so it will be interesting to see by the end of the year if the audience’s prediction of a 10% rise is correct.
2017 has been a good year for zinc trading on the LME, with volumes up 9% year on year (as of 12 October 2017). The audience predicted that the price of zinc would be up 5% at the end of 2017 – the LME Official Settlement Price for zinc at the time of writing this (price established on 12 October) is $3,333 and at the time of the Metals Seminar panel (price established on 28 October 2016) was $2,374 – a 40% increase, which is much higher than the audience’s prediction. With much talk about the rise of electric vehicles and sustainability within the metals markets, it will be interesting to see which metals the audience will place their faith in at this year’s seminar.
Our precious metals panel last year drew on thoughts from the World Gold Council, Société Générale Newedge, ICBC Standard Bank and OSTC, each of which have all played a vital role in the launch of LMEprecious this year. 30% of the panel’s audience believed the shift in pricing power to Chinese markets would be the biggest driver of change for the precious metals market in 2017. Whilst China continues to play a crucial role in the precious metals market, London remains the centre of global price discovery. On the topic of precious metals pricing, the LME is now publishing intraday LME Gold and LME Silver reference prices following requests from precious metal market participants and users of our LMEprecious contracts.
27% of the audience polled thought that the biggest driver for change in the precious metals market would be developments in exchange trading and central clearing. The LMEprecious team co-wrote a white paper with Deloitte on the benefits of trading precious metals on-exchange and clearing via CCP that considers how increased costs of OTC trading and higher capital requirements are impacting derivatives trading. Whilst it still remains to be seen how these factors will impact precious metals trading further, the LME will continue to monitor and respond to these developments and some of them will be explored in this year’s precious metals panel.
LME CEO, Matthew Chamberlain, last year moderated a panel looking at commodity financing and how technology is changing this industry. He was joined by representatives from Deutsche Bank, Henry Bath and RB Capital. Over 30% of our audience last year believed that banks retrenching in the trade finance space was the biggest challenge facing the metals finance industry. The next biggest challenge facing the industry, according to our audience, was the security of in-warehouse metal and we understand that scrutiny of commodity storage has only increased this year.
The role of commodities financing in shaping China’s “Belt and Road” initiative and opportunities for the metals market will be touched upon in our China seminar, which follows this year’s Metals Seminar.
Looking ahead to this year's LME Week
When asked to describe the metals industry in one word last year, our audience was mixed in sentiment:
At this year’s LME Metals Seminar, it will be interesting to see how industry participants’ sentiments have changed as representatives from the entire supply chain come together to discuss current trends in the metals markets. For more information on LME Week, as well as registration details, visit the events section of our website.