Base Metal Prices On The Upswing

Bank of America Merrill Lynch has revised its base metal price forecasts for the year, saying prices have risen faster than it had expected.

The bank has upped its 2009 price forecasts for aluminum to US75¢ per lb. from US68¢; for copper to US$2.15 per lb. from US$1.77; for nickel to US$6.52 per lb. from US$5.67, and for zinc to US67¢ from US64¢ per lb.

Those prices should rise even higher in 2010 to US79¢ per lb. for aluminum, US$3.18 per lb. for copper, US$8.39 per lb. for nickel, and US82¢ for zinc.

“The world economy has been stabilizing, supported by the swift implementation of monetary and fiscal stimulus packages,” the bank noted in an Aug. 5 research note to clients. “Our macro colleagues now expect the global economy to expand by 3.8 per cent year-on-year in 2010, driven by GDP growth of 2.6 per cent in the United States and 10.1 per cent in China, the key metal consuming countries.”

The bank’s analysts forecast an end to the slump in global metal demand in the second half of 2009 and said they “expect global consumption to grow at positive rates for all base metals” in 2010.

With the exception of aluminum, structural supply shortages remain for many industrial metals. Copper concentrate, for example, is forecast to move into deficit by 2011, the report predicts.

Inventories of refined copper, for instance, have been at an average of 1.5 weeks of demand since 2004.

The report also noted that global vehicle production is set to expand and that the worst for steel is over.