Further fall forecast in LME metal prices
By Kenneth Gooding, Mining Correspondent
London Metal Exchange traded metals prices will continue to fall next year, according to the research team at Billiton Metals. Nickel will be the most badly affected and Billiton expects the average price next year to be nearly 44 per cent below 1997's average.
Angus MacMillan and Karen Norton, the Billiton team, have brought forward their annual forecasts because their work for Billiton is ending after nine years. Billiton Metals has been sold to Metallgesellschaft and from now on Billiton clients will receive MG research material produced in co-operation with Warburg Dillon Read.
Ms Norton and Mr MacMillan made it clear their views on metals had not been coloured by their personal situations. "You have not heard the last of us," they said. "For God's sake, put your hankies away."
Tear-shedding should be reserved for some mining groups which, if the Billiton forecasts are accurate, are facing a very tough environment in 1999.
Billiton predicts there will be deliberate cuts and supply side problems that will constrain nickel output, but this will be offset through expansion elsewhere and start-up of new capacity, particularly in Australia.
"Even allowing for a decline in Russian exports, this market will record further surpluses both this year and next, reflecting weak demand from the stainless steel industry," the team said in the last of its weekly metals research reports.
They said nickel, which averaged $3.20 a pound in 1997, will average $2.10 this year and $1.80 next.
Copper is predicted to show the second biggest fall this year, from $1.032 a pound to 75 cents, or one of 27.3 per cent, and to slip by a further 6.7 per cent to an average 70 cents next year.
Aluminium is likely to fall by 14.5 per cent this year, from last year's average 72.5 cents a pound, to 62 cents, and then to slip by a further 3 per cent to 60 cents.
Lead is forecast to fall 15.2 per cent from last year's 28.3 cents a pound to 24 cents and by a further 12.5 per cent to 21 cents in 1999.
Zinc is seen falling by 22.2 per cent from last year's 59.8 cents a pound to 46.5 cents this year and to slip another 3.2 per cent to an average 45 cents next year.
Tin is predicted to fall only 2.3 per cent to $2.50 a pound this year and by 4 per cent to $2.40 next year.
Ms Norton and Mr MacMillan said prices have dropped because metals- intensive activities in Japan and Asia have stopped, although demand in Europe and North America has held firm. "The extent to which these areas will continue to offset Asian weakness will be the critical issue for metal demand next year," the researchers suggest.
Financial Times
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