JOHANNESBURG (miningweekly.com) – Since bottoming out in early 2016 and staging an impressive, albeit largely speculative, rally over the past year-and-a-half, industrial metals will experience a gradual price recovery over the coming years, as improving fundamentals support a stabilisation, rather than rebound, in prices, research firm BMI said on Friday.
The traditional bellwether metal, copper, was expected to most closely follow this narrative, with BMI forecasting a 12.9% year-on-year price increase for this year.
Meanwhile, BMI noted that steel and iron-ore prices would remain relatively weaker, as years of oversupply and slowing Chinese consumption growth provided limited upside pressure.
“Although steel prices will return to a modest uptrend beyond 2018, the global long-term outlook for steel demand remains comparatively downbeat, as rising efficiency reduces overall consumption and the acceleration of Chinese economic rebalancing limits upside potential,” it pointed out.
On the other hand, while zinc's outperformance is no surprise, given the constrained ore supply, tin and lead prices will also prove particularly resilient.
“We forecast tin and lead prices to increase by an average of 4.7% and 4.3% yearly over 2017 to 2021, respectively.”
The global tin market is expected to experience significant tightening over the coming years, on both the supply and demand side, posting the largest decline in stock-to-use ratio from 15.5% in 2016 to 6% by 2021.
“Specifically, tin's versatility and use in multiple sectors, such as electronics manufacturing and chemicals, will sustain demand for the metal over a multidecade horizon, while depleting ore reserves and a sparse global project pipeline will curb tin supply,” BMI said.
BMI further pointed out that it expected lead prices to rise and average above-consensus at $2 300/t by 2021, as the global market deficit widens further, reflected in the low stock-to-use ratio forecast of 3.1% by 2021.
Deficits will be due to stagnating production growth from major producers and more resilient consumption growth, driven by the automotive sectors in key markets, such as India and China.