Commodities Prices May Rise 5.5% on Global Recovery, EIU Says
London, March 27 (Bloomberg) -- Prices of industrial raw
materials will rebound ``sharply'' this year and next as
recovering economies boost demand for commodities from rubber to
wool to copper, the Economist Intelligence Unit said.
The group's index of nine commodities will gain 5.5 percent
this year and 11 percent in 2003, the EIU said. The largest
gainers this year will be fibers such as wool, and rubber. Base
metals such as copper, lead and nickel will also rise, the London-
based group said in a report.
``A global economic recovery is already under way,'' Matthew
Parry, the EIU's commodities editor, said in an interview. ``The
downturn wasn't as bad as we originally thought. It'll be moderate
economic growth in the first quarter, accelerating during pretty
much all of 2002 and into 2003.''
The EIU index, which includes aluminum, copper, cotton, wool,
lead, natural rubber, nickel, tin and zinc, fell by almost a 10th
last year, The U.S. economy, the world's largest, entered its
first recession in a decade, depressing demand for manufactured
goods from microchips to designer dresses.
Crude oil, excluded from the index because its volume would
dwarf other commodities, will fall to an average of $19.64 a
barrel in London this year, from $24.47 last year and $28.48 in
2000, the EIU said.
The Organization of Petroleum Exporting Countries, which
supplies more than a third of all crude oil, will stick by pledges
to cut production, keeping prices above the low of $16.65 reached
in November, the EIU said. OPEC lowered output targets four times
last year to boost prices.
Iraq Oil Premium
As much as $5 of the $24.85 a barrel Brent crude oil
currently fetches stems from concern about U.S. military action
against Iraq, the fourth-biggest OPEC producer, Parry said. That
premium will likely ``dwindle away,'' he said.
Natural rubber prices should rise 8.7 percent this year to
$810 a ton, then soar by 47.5 percent in 2003 to $1,195 a ton, the
EIU said. Producers will cut supplies of natural rubber, tapped
from trees unlike the synthetic varieties made from
petrochemicals, as demand rises.
Wool prices may increase by 19 percent this year to an
average A$9.25 ($4.90) a pound, then slip 2.3 percent next year.
Concern over a shortage early this year has encouraged consumers
to switch to substitute fibers.
Cotton will rise 1.1 percent this year to 48.5 cents a pound
before jumping 17.5 percent to 57 cents next year, the EIU
forecast. Rising demand this year will lead to a deficit in 2002.
Copper will lead the price rises in base metals this year as
demand rebounds with the economy, the report said. Prices will
rise 5.9 percent this year to an average of 75.8 cents a pound,
then add 13.9 percent next year.
Aluminum
Aluminum prices may rise 2.8 percent to $1,495 a ton this
year. They'll gain another 5.9 percent in 2003 and keep advancing
until the second quarter of 2004, the EIU predicted.
Lead, used in batteries, and nickel, part of stainless steel,
will add 5.8 percent next year. Tin, used to make electronic
devices and food cans, will shed 2.8 percent this year before a
2002 jump of 23 percent as refined production falls to less than
demand.
Prices for zinc, used to coat steel, will drop 4.2 percent
this year and rise 14.3 percent in 2003.
--Stuart Wallace in the London newsroom (44-20 7673-2388), or
swallace6@bloomberg.net. Editor: Mellow |
