Purchasing

Robert J. (Bob) Garino

Some Friday the 13th views on nonferrous prices
July 13, 2007

Is there a black cat crossing some forecasts?:

It’s Friday the 13th (feeling lucky?) and the London Metal Exchange is kind of mixed with lead trading to another all-time high early in the day ($3,040/metric ton, or $1.38/lb)…nickel, however, continues to lose ground…copper, meanwhile, was trading above previous days’ closes, supported by the latest decline in LME inventories and the still unresolved labor issues in Chile and Canada…London gold was last indicated at $667.75, taking its cue from the weaker dollar and firmer oil prices...

Anyway, twice a year, the Reuters News Service surveys a bunch of hard drinking analysts for the best guess for average base metal prices for the current year and the year ahead. Here are the summary results of this year’s mid-year Reuters survey:

More forecasts…it seems that more and more folks who do have the courage to forecast are revising earlier guesses and, significantly, are raising their expectations for this year and next…here’s a closer look at J.P. Morgan’s crystal ball:

Barclays Capital, however, sees an exception when it comes to zinc…their forecast for zinc falls below the Reuters consensus for 2008, with their guess of a $1.27 average vs. the consensus of $1.36…the firm credits what they see as “heavy pressure from increased supply” for the lower average in ’08…more than a few also are thinking that supply will catch up and surpass new demand for a number of metals next year…but, of course, that was also the consensus guess for this year…

As for lead, it’s back to the drawing board for UBS…earlier the bank was figuring on an average of around 70¢/lb. for this year. Their latest forecast now has cash lead averaging $1.02, and for 2008, they have lead averaging $1.05 (!)

And then there’s tin…Societe Generale remains bullish on the stuff, figuring that the 2007 global tin market will post a supply deficit of some 25,000 metric tons…this, they maintain, could move tin toward $6.80/lb “at least”…

According to the ISSF (International Stainless Steel Forum), compared to the very weak first quarter of 2006, the global stainless steel production increase was 15% in the first quarter of 2007. Asia, driven by China, is taking the lead with a production increase of 25.2%. The Central and Eastern Europe region also shows a strong increase in this comparison. The Americas and Western Europe/Africa regions performed according to their long-term averages…

So, research firm MEPS expects to see stainless production drop “over the next few months” resulting in lower demand for primary nickel. Consequently, their experts see LME nickel “around $30,000” ($13.61/lb) by the end of this year.

Posted by Robert J. (Bob) Garino on July 13, 2007 | Comments (0)