Copper, Zinc Price Forecasts Raised at Macquarie Bank (Update1)
April 13 (Bloomberg) -- Copper and zinc prices will rise because of supply disruptions and rising demand, said Macquarie Bank Ltd., Australia's biggest investment bank.
Cash prices for copper, used in making wires and pipes, may average $5,590 a metric ton, or $2.54 a pound, this year from $3,681 a ton last year, Macquarie Bank analysts including Brendan Harris said in an April 13 report. The bank raised its copper price forecasts by 15 percent from an earlier prediction.
Copper and zinc reached records yesterday in London as metal producers struggle to meet demand led by China amid declining stockpiles and mine stoppages. The International Monetary Fund may raise its forecast for global economic growth this year partly because of expansion in Japan and the rest of Asia.
``We have again been proven too conservative as the improving macroeconomic backdrop has shored up the demand outlook while ongoing supply disruptions continue to dampen the supply-side response,'' the Macquarie analysts said.
Grupo Mexico, the world's seventh-largest copper producer, yesterday said a 20-day strike at a copper concentrator in Mexico may force it to suspend May copper deliveries to clients.
Macquarie revised its prediction of a global surplus of refined copper for this year to a deficit. It raised its copper price forecasts for 2007 to 2010 by between 8.3 percent and 48 percent.
The bank increased its 2006 zinc prices forecasts by 4.7 percent to $1.23 a pound, or double last year's average price of 62.6 cents on the London Metal Exchange, or LME. Zinc is used to galvanize steel.
``We continue to expect virtually all of the LME zinc stocks to be run down by the end of the year,'' the bank said.
Zinc inventory monitored by the LME has halved since 2003 to 264,625 metric tons, or less than 10 days of global consumption.
Macquarie joins other investment banks in revising its metal prices forecasts. Deutsche Bank on April 11 raised its average base metal prices forecasts for 2006 by 14 percent.
To contact the reporter on this story:
Tan Hwee Ann in Melbourne at hatan@bloomberg.net;
Last Updated: April 12, 2006 21:00 EDT
