Goldman: Mixed Metals Pricing For 2007

Despite a number of regional and global slowdowns in manufacturing growth, the Asian Tiger economies are forecast to continue to show their thirst for some base metals, driving up price forecasts for zinc and nickel in 2007. According to an article in The Globe and Mail which quotes a new sell-side report from Goldman Sachs, the firm has "increased its 2007 average price forecast for zinc by 49 per cent, to $4,398 (U.S.) a tonne from its previous forecast of $2,875. It [also] raised its 2007 nickel forecast by 33 per cent, to $25,000 a tonne from $18,750." For global manufacturers that are facing decreased volumes due to slowing demand, the spike in Zinc and Nickel pricing will serve as a double margin whammy.

But the good news is that these forecast increases are not blanket across all ferrous and non-ferrous categories. The article notes that its existing copper and aluminium pricing forecasts remain the same and that these “base metals [will move into an] overall "modest supply/demand surplus in 2007, due to slowing demand." Goldman forecasts that iron ore pricing, however, will rise "by 8 per cent in 2007 and 10 per cent in 2008 ... [pegging averages of] $51 a tonne for 2007 and $48 a tonne for 2008," respectively. All in all, I'd describe it as a mixed metals bag for the next 24 months.

Jason Busch

Discuss this:

Your email address will not be published. Required fields are marked *