S&P revises 2013 metals price outlook; iron ore, copper still favored


Standard & Poor's has revised its 2013 metals price outlook, predicting generally favorable copper and iron ore prices to continue in 2013 and 2014, while aluminium and nickel prices will be constrained, it said in a report Wednesday.

S&P has maintained its price assumption of $120/mt for iron ore in 2013 and $110/mt in 2014.

"Despite higher average prices of about $140/mt so far in 2013, we factor into our forecast new capacity in the second half of 2013 and 2014 that could exert some pricing pressure," the report said.

S&P, like Platts, is part of McGraw Hill Financial.

The report said iron ore demand would rise 1-2% year on year in 2013, primarily because of Asian demand as volatility there remains high as trading activity grows, particularly in China.

In the longer term, S&P expects iron ore prices to continue to drop following capacity expansions and based on the maturity level of the steel industry, it said.

S&P expects copper prices to average $3.30/lb in 2013, due to a fairly attractive supply-demand balance and moderate growth in demand amid recent supply disruptions, coupled with continued falling grades that have resulted in lower production at major mines in South America.

It expects prices to average around $3.10/lb in 2014 before declining to $2.70/lb by 2015.

For nickel, S&P's price assumption for 2013 has fallen to $7/lb from $7.50/lb, despite likely moderate growth in demand, because of the currently higher-than-expected oversupply stemming from various high-pressure acid leach projects.

"We still expect prices to recover to above $8/lb in the long term because we take into account that current spot prices are close to cash costs of nickel pig iron producers," S&P said.

For aluminium, S&P maintained its price assumption of $0.95 cents/lb for 2013 with a gradual recovery to $1/lb in 2015.

"We believe global economic recovery will support continued stable demand for aluminium," the report said.

However, the potential of low-cost aluminium capacity in India and the Middle East will continue to pressure prices, potentially leading to further high-cost capacity cuts, S&P said.

S&P also forecast 3-4% global GDP growth through 2015, supported by 8% growth in China, 2.5-3% growth in the US and steady growth in Europe. It said that would translate into modest growth in commodities demand.

Source from : Platts