SG: ow inventories favour copper and zinc in H2 - Investec
nvestec Asset Management said that low inventory levels, combined with favorable supply and demand fundamentals will benefit copper and zinc ahead of other London Metal Exchange metals.
Investec forecasts copper to average USD 4,600 per tonne this year with zinc seen at around USD 1,700 per tones to USD 1,800 per tonne. Next year it sees copper prices at an average of USD 5,400.
Mr George Cheveley manager on the global commodities team said that base metal prices were now at reasonable levels. Mr Cheveley said that "Supply has been cut in zinc much more aggressively earlier this year and in copper it has always struggled to meet demand over the last few years."
Mr Cheveley said that after the seasonal summer lull, Chinese demand would remain robust, while the end of de stocking in the western world would support copper and zinc.
He said that "In aluminium and nickel, we've seen big increases in supply overtaking demand in the past year in a big way."
Mr Cheveley said that "There has been very good fundamental demand in China. Fundamental underlying demand has been very strong in China and it's not just about Chinese government intervention of stockpiling. That is fundamental demand going into infrastructure projects."
Copper used in power and construction was traded at about USD 5,250 per tonne recently and has risen by about 60% this year. Zinc was at USD 1,540 per tonne. Copper hit an all time high of USD 8,940 per tonne in July 2008, while zinc touched a record high of USD 4,580 in November 2006. LME inventories in copper are at 261,100 tonnes its lowest level since November 2008, while zinc is at 353,850 tonnes down from levels above 780,000 tonnes in April 2004.
