Macquarie raises 2013 Copper price forecast ; cuts Nickel

LONDON (Scrap Monster): The Australian investment bank Macquarie raised its 2013 copper price forecast and cut its nickel forecast.

According to Macquarie, copper and tin are likely to be the biggest near-term beneficiaries of improved apparent demand through the first half of 2013, with supply availability still limited

They continued that "We have become more cautious on nickel over the next two to three years, reflecting the likelihood of ongoing oversupply while [our] aluminium [forecast] has been reduced to reflect the cost inflation offset from Western China smelting capacity growth."

The nickel price forecast was cut to $17,000/mt in 2013 from $17,527/mt in 2012. The 2013 prediction is down 6.8% from a previous annual forecast. Lead and tin have seen increases to forecast expectations.

Tin is forecast to average $23,438/mt in 2013 from $21,092/mt in 2012 with lead at $2,300/mt from $2,061/mt. The tin forecast is up 9% from a previous 2013 outlook with the lead price up 10.2%.

Copper is seen at $8,063/mt from $7,950/mt in 2012. The forecast is flat on the previous expectation for 2013.

For copper the bank expects a stronger H1 and weaker H2 than previously thought.

"2013 could be a year where copper sees higher highs and lower lows than in 2012. We have raised our copper forecasts in 2016-17 to reflect a steepening top quartile of the cost curve -- to be clear we do not think copper will be at a premium to cost support over this period," Macquarie said. The 2016 copper price is seen at $7,525/mt and then $7,875/mt in 2017. The long-term outlook is for a copper price of $6,504/mt.

"Our aluminium market forecast has been reduced in the medium-long term to reflect the combination of high stocks, continued surplus and ongoing expansion of smelting capacity in Western China which provides a strong offset to cost inflation of the overall industry. However, with access to stocks set to remain limited, we believe aluminium premiums will remain high and also see 2013 upside to premiums for zinc and lead," the bank added. For aluminium Macquarie is predicting an average calender price of $2,100/mt, down 2.9% from a previous outlook.