(Kitco News) - Commodity prices and price volatility in 2014 could be “relatively” subdued as the markets work through excessive supply and inventory build-ups from for the next few years, BMO Global Research said in a research note on Tuesday, and many base metals markets face these challenges.
In base metals, the firm left its 2014 copper price forecast unchanged at $3.25 a pound, but raised its 2015 forecast by 20 cents to $3.10, which reflects further cuts to mine supply forecasts. The refined copper market remains tight in 2014.
Their 2014 aluminum forecast was cut by 4 cents a pound to 78 cents and their 2015 outlook by 7 cents to 83 cents, as it reflects the prolonged financing activity because of high inventory levels. They do not see an Indonesian bauxite export ban affecting the metal.
The cut their 2014 and 2015 nickel price forecasts by 65 cents a pound and $1 to $6.60 and $7, respectively, as inventory levels remain high. BMO raised their 2014 zinc price forecasts by 5 cents a pound to 90 cents, and kept the 2015 forecast at that price. Lead values for 2014 were left unchanged at $1 a pound, with the 2015 forecast lowered by 15 cents to $1.
“Demand growth remains steady but not stellar, as China grapples with the complexities of maintaining social stability while implementing much-needed longer-term reforms. In the meantime, capex cuts announced by miners are setting the stage for the next up cycle, which BMO Research expects could be a few years away yet --and could come much sooner for some commodities than others. The longer-term curtailment of overcapacity in China should eventually improve commodity fundamentals as well,” they said.
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By Debbie Carlson firstname.lastname@example.org