Raymond James raises price forecasts for base metals, iron ore

Copper cathodes at Glencore's Lomas Bayas project in Chile. Credit: Glencore.

Raymond James forecasts higher average prices for copper, nickel, lead, zinc and iron ore, but lower prices for uranium, its analysts wrote in a research note.

The financial services firm has increased its average copper price forecast for this year to US$2.71 per lb., up from its previous estimate of US$2.62 per pound. Next year, it expects copper will average US$2.80 per lb. (up from US$2.70 per lb.) and remain at that level in 2022. The company says the copper price forecasts “reflect the market tightness created by Covid-19 related supply disruptions and a strong rebound in economic activity in China in 3Q20.”

Nickel is expected to average US$6.08 per lb. in 2020 (up from its earlier forecast of $5.58 per lb.), rising to US$6.50 per lb. in 2021 (up from US$6.00 per lb.), and to US$7.00 per lb. (unchanged) in 2022.

This year, zinc should average 98¢ per lb. (up from 91¢), the company stated. Next year it will average 95¢ per lb. (unchanged), rising to US$1.00 per lb. (unchanged) in 2022.

Lead is expected to average 83¢ per lb. this year (up from 79¢). In 2021 the metal is expected to average 87¢ per lb. (unchanged) and 95¢ (unchanged) in 2022.

As for iron ore, Raymond James forecasts an average price in 2020 of US$114 per tonne (up from its previous forecast of US$102 per tonne). In 2021, the average will slip to US$96 per tonne (up from its previous forecast of US$88 per tonne), and to US$85 per tonne in 2022 (up from US$80 per tonne). Its price forecasts for 65% Fe iron ore fines CFR China reflect “greater supply uncertainty and strong demand from China,” the report stated.

By contrast, uranium prices are expected to move lower. This year, Raymond James expects an average of US$31.36 per lb. (down from US$33.11 per lb.) In 2021, average prices are forecast to reach US$42.50 per lb. (unchanged), and US$45 per lb. (unchanged) in 2022.

Nevertheless, Raymond James remains optimistic about uranium. While it trimmed its uranium price forecasts for 2020 “on weaker Q3 and Q4 pricing,” analysts “still continue to expect uranium prices to increase over the next few years as producers as well as utilities enter the market to purchase pounds as uncovered demand post-2021 grows.”


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