GLOBAL METALS QUATERLY

Macro : A more rapid regression of Chinese economic data points than predicted in our last update at the beginning of Q4 2018 has caused us to lower base metal forecasts. However, C hinese stimulus, a weaker dollar and structural deficits in most metal markets should be broadly supportive of base metals , especially i f a trade war de-escalation is agreed before March. This is supported by our economists forecast of 6.3% GDP growth in China and 2.5% global ly . A weaker dollar should also be su pportive of precious metals in 2019. Base Aluminium: We f orecast average aluminium prices of $2025/t in 2019 . The arrival of Rusal material onto the LME and continued macro worries will keep prices low in Q1 , before deficits in th e aluminium market & expected capacity cuts in China support the market in Q2. Copper: With relatively balanced supply demand fundamentals at present and a long-term bullish narrative the copper sell off in H2 2018 seems overdone. W e see prices averaging $6425/t in 2019. Nickel: Wit h the stainless steel industry likely to be boosted by Chinese stimulus and usual season al demand strength after Chinese New Year, we expect prices to recover in Q2 . We forecast an average nickel price of $12875/t in 201 9. However, we have lowered our 2020 forecast due to expected developments in HPAL technology. Zinc: R ising concentrate , and consequentially increasing refined supply as treatment charges rise, will limit gains for zinc . We forecast prices to average $2675/t in 2019, with upside in the next 6 months from low inventories , lagging refined production and a boost to steel demand in China. Precious Gold: We see gold prices benefiting from a weaker dollar. This will come on the back of a deepening budget deficit, slower growth and the e nd of the Fed rate hike cycle. Towards the end of the year, expectations of an ECB rate hike should also push the dollar lower. We see gold prices averaging $1,330/oz this year. Silver & Platinum: Both metals are expected to follow the price of gold and benefit from the weaker dollar. Weak demand side fundamentals will mean that platinum prices will struggle to break the $1,000/oz . Palladium: Our view is that palladium prices are at the mercy of supply side dynamics, should Russian state supply come on the market the price drop could be sharp. The demand side picture is bleak for 2019, as US and Chinese automobile demand is dropping.