China suspends oil price adjustment

　　Sucden Financial said Tuesday it expected rising demand from China and global economic uncertainty as key drivers for the continued rally in the base metals complex.

　　"EU uncertainties, UK uncertainties and Japanese yen strength are all contributing to a mixed macro outlook, but sentiment is improving and metals prices are stabilizing having built bases," Sucden said in a quarterly report.

　　The base metals complex has suffered large sell-offs in recent years, along with large overcapacity and limited demand. Prolonged periods of low pricing are now beginning to bite into the market, in the form of cuts in mining, production cuts and a heavily destocked market, fueling recent rallies seen across the complex.

　　Aluminum has risen 12% in the year to date, basis London Metal Exchange data, starting the year at $1,470/mt, settling Monday at $1,645/mt.

　　According to Sucden, the metal saw a significant recovery during the second quarter, adding 8.3% due to rises across the whole complex.

　　Low prices for the metal curbed Chinese production, and robust demand has helped push up prices.

　　"At current Chinese price levels, most domestic producers are now profitable," the report said, adding that this would cap international aluminum prices.

　　The broker sees aluminum on the LME trading in a range of $1,580-$1,750/mt during Q3.

　　Copper has spent most of the year range-bound, between $4,300 and $5,200/mt, a narrow range when compared with the $2,000 range seen over 2015.

　　From January 1, the metal has risen 7%, settling at $4,839/mt Monday.

　　Sucden sees the copper market as "balanced," forecasting a 170,000 mt deficit for the year. The International Copper Study Group saw a 40,000 mt net surplus in Q1, and is forecasting a 56,000 mt deficit by the year-end.

　　The group said the copper market was expected to "remain essentially balanced in 2016 and 2017," in a report released in March.

　　These surplus/deficit values amount to less than 1% of annual consumption (estimated at 21 million mt by the ICSG), indicative of a "balanced market," the report said.

　　Sucden sees copper staying in a tight range for Q3, trading between $4,750-$5,270/mt, saying: "Low copper prices, relatively low stocks and a destocked market suggest the downside is likely to be limited."

　　For zinc, nickel, tin and lead, Sucden sees supply cuts weighing in on the metals, and is bullish to some degree on all.

　　Zinc is seen trading between $1,940-$2,300/mt in Q3. Significant supply cuts will likely create a notable deficit, supporting prices.

　　Nickel is forecast at a $9,000-$11,400/mt range for the quarter, with continued concerns over the Philippines, and potential mine closures there adding to the bullish sentiment.

　　The forecast for lead is slightly bullish, at $1,700-$1,950/mt, again on tightening supply.

Tin is seen trading between $16,500-$19,500/mt, with Chinese restocking, and falling Indonesian exports help buoy prices up in the third quarter.

Nickel settled at $10,310/mt on the LME, Monday, up 21% year to date. Tin is also up 23% to date, settling at $17,850/mt, while zinc is up a massive 40%, at $2,207.50/mt. Lead settled at $1,851/mt, up 6% year to date.