Industrial commodity prices will remain high in 2008
Friday, 20 July 2007
LONDON, Jul 19 (store.eiu.com): Demand for most industrial commodities continues to run ahead of supply.
As a result, prices (as measured by the Economist Intelligence Unit's Industrial Raw Materials (IRM) price index) will rise by an average of 12 per cent this year-their sixth consecutive annual rise.
Aluminium: Global supply will be running ahead of demand, but only marginally. Stocks are low in relation to consumption and prices will not fall below US$2,500/tonne.
Copper: As a result of improved fundamentals (rising Chinese and EU demand coupled with strike threats to supply), prices will remain well supported until mid-2008, when a return to balance is anticipated.
Crude oil: The outlook has turned bullish again, reflecting strong demand, OPEC production cuts and the threat of supply disruption, offset by only modest increases in non-OPEC production.
Fibres: Global demand for cotton will be running ahead of supply over the forecast period, and prices will benefit. The worst drought in Australia since 1925 will reduce global stocks of wool, lifting prices, especially of apparel grades.
Lead: When, or if, Australia's Magellan mine comes back on stream, rising supply of concentrate and slowing growth in global demand will make for weaker prices.
Natural Rubber: First-quarter prices ran ahead of expectations, but have since realigned with fundamentals. These have become more bearish; our price forecasts have been lowered slightly.
Nickel: The acute immediate shortage has eased, and prices will soften from current overvalued levels as supply begins to overtake demand in 2008. Nonetheless, support from a robust stainless steel sector will persist.
Tin: Resumption of Indonesian production has ended the rise in prices, but the final liquidation of the US strategic stockpile will support prices in 2008.
Zinc: The market remains in deficit this year, but large amounts of spare capacity and a return of Chinese exports will put pressure on prices from 2008.
As a result, prices (as measured by the Economist Intelligence Unit's Industrial Raw Materials (IRM) price index) will rise by an average of 12 per cent this year-their sixth consecutive annual rise.
Aluminium: Global supply will be running ahead of demand, but only marginally. Stocks are low in relation to consumption and prices will not fall below US$2,500/tonne.
Copper: As a result of improved fundamentals (rising Chinese and EU demand coupled with strike threats to supply), prices will remain well supported until mid-2008, when a return to balance is anticipated.
Crude oil: The outlook has turned bullish again, reflecting strong demand, OPEC production cuts and the threat of supply disruption, offset by only modest increases in non-OPEC production.
Fibres: Global demand for cotton will be running ahead of supply over the forecast period, and prices will benefit. The worst drought in Australia since 1925 will reduce global stocks of wool, lifting prices, especially of apparel grades.
Lead: When, or if, Australia's Magellan mine comes back on stream, rising supply of concentrate and slowing growth in global demand will make for weaker prices.
Natural Rubber: First-quarter prices ran ahead of expectations, but have since realigned with fundamentals. These have become more bearish; our price forecasts have been lowered slightly.
Nickel: The acute immediate shortage has eased, and prices will soften from current overvalued levels as supply begins to overtake demand in 2008. Nonetheless, support from a robust stainless steel sector will persist.
Tin: Resumption of Indonesian production has ended the rise in prices, but the final liquidation of the US strategic stockpile will support prices in 2008.
Zinc: The market remains in deficit this year, but large amounts of spare capacity and a return of Chinese exports will put pressure on prices from 2008.