A comparative review of price forecasts for 24 commodities published by leading UK-based consultancy CRU shows most of the LME metals performing better than other commodities in the next five years.
CRU has constructed a Heat Chart rating commodities from “freezing” to “hot” by comparing price forecasts for 2016 with the actual average in the second quarter of 2012. On average, commodities are rated as “warm”, with an 8% increase expected by 2016. CRU predicts that 13 markets will see higher prices in 2016 whilst lower prices are forecast for 11 markets. This is a significant downgrade, as CRU previously had higher commodity price forecasts outweighing lower price expectations by a 2:1 ratio.
In the report CRU’s Multi-Commodity Manager Peter Ghilchik noted: “Commodities can be split into two main camps: those that will remain supply constrained versus those where excess capacity is already apparent. The greatest medium-term supply constraints will occur in the palladium, tin, zinc, uranium and alumina markets. For commodities with a looming supply constraint the current slowdown in development activity makes a tighter market by 2016 more certain.”
The LME traded metals as a whole are expected to regain some of the recent price losses, with supply constraints supporting the biggest rises in tin and zinc. CRU expects to see an average 30% price increase for the six main LME traded metals by 2016. The copper story is the exception to this as CRU sees a significant bulge in new capacity due to come online after 2014 which could push that market into surplus and depress prices.
CRU’s tin market analysis is carried out as a joint-venture with ITRI. The report and chart can be accessed at the link below:
http://cru.msgfocus.com/files/amf_cru/project_245/Commodity_Heat_2012_Q3_V3_2_.pdf
