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Editorial
60,000 Highelium Low
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Aluminium
Our forecast for copper of US-Dollar 6000 is the lowest of
the sample, of which the high is US-Dollar 7,800. This is
from one of three analysts who believe the average price this
year will be higher than in 2007. We can only assume that
these analysts take a more sanguine view about the global
economy than most others and/or they expect production
to once again fall short of expectations. In any event, the
consensus is that the copper price will average 5.1 per cent
lower this year than in 2007. We think this optimistic on a
Panglossian scale.
Copperium
Zincerium
Leaderium
Nickelium
No one expects the zinc price to be higher this year, although
the spread between the highest and lowest forecast ties
with lead as being the greatest at 38 per cent. However, the
highest forecast of an average of US-Dollar 2,850, as well
as a number of others, suggests that prices are expected to
rally strongly, given that the market is currently trading below
US-Dollar 2,300. We think this extremely unlikely and our
forecast of US-Dollar 2,200 is the lower end of expectations.
The consensus is that lead prices will fall on average by just
3 per cent this year to US-Dollar 2,511. Again we think this
is optimistic and are forecasting US-Dollar 2,200. As noted,
there is a wide divergence of opinion – although having said
that, the high forecast of US-Dollar 3,300 is rather out on a
limb as is the low of US-Dollar 2,050, with most forecasts in
Tinkelium
High and low forecasts 2008 base
metals prices (US-Dollar/tonne).
the US-Dollar 2,000-2,500 range. Four analysts believe the
average price will be higher this year than in 2007.
The nickel price is expected to record a substantial fall this
year, with the consensus pointing to a 25.5 per cent slump
to US-Dollar 27,782. All analysts agree that the price will fall,
although there is a wide spread on the extent of the decline,
with a high of US-Dollar 30,864 (14 US-Dollar/lb) and a
low of US-Dollar 24,000 – which is our forecast – compared
with US-Dollar 37,275 last year. As for tin, most analysts
expect the average price this year to be higher than in 2007
and even those who do not are predicting prices at near historically
high levels. Again, BaseMetals.com is near the bottom
of the scale, with a forecast of US-Dollar 13,000.
Finally, we’ve made two observations:
• Firstly, these metals do not trade in a vacuum and their
price movements are often dependent not only on the major
contracts (particularly copper) and other commodities (such
as oil and precious metals). Looking at the table of forecasts,
it appears that some analysts have failed to take this
into account.
• Moreover, most analysts seem to have a rather rose-tinted
view of the global economic outlook and the forecasts generally
portray that there is a good deal of ‘fence sitting’ going
on. Given how the markets have moved in the past couple of
years this is entirely understandable, but only serves to confirm
that forecasting is a mug’s game. u
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