London 29/06/2016 - By Charlie Dickens
Base metals price are set to stall due to the UK's recent unexpected decision to leave the EU, Citi Bank said, despite the mostly upward trajectory across most of the complex in the second quarter,
Prior to Friday's Brexit, zinc, aluminium and nickel had risen 13.5 percent, 9.7 percent and 8.6 percent respectively since the start of the quarter.
But with the uncertainty triggered by the split, metals prices are likely to consolidate, the bank said in a note on Wednesday.
"We expect to see a drawn-out period of uncertainty as investors evaluate the impact of Brexit contagion," it said.
It sees copper averaging $4,700 per tonne in the second quarter. The impact of the Brexit vote on the red metal so far has been minimal - it fell about 1.7 percent after Friday's decision to $4,698 per tonne, basis three months but has since recovered to trade recently at $4,820, up $2 on last night's close.
Trade has been steady on Wednesday, ranging from $4,780 to $4,831.50 so far, with more than 10,000 lots changing hands on Select.
Likewise, zinc, aluminium and nickel were last at $2,083.50, $1,629.00, and $9,395.00 per tonne respectively, up $8.50, up $5 and up $55 on their respective closes on Tuesday.
Citi believes that the contrasting performance of copper and other base metals is down to the performance of copper in the second quarter.
"The red metal has significantly under-performed the industrial metals sector over the last quarter", it said, and has therefore not felt the effects of Brexit to the same extent.
Citi predicts little or no impact on trade volume or LME market mechanics.
(Editing by Mark Shaw)