Metal Prices Unlikely to Recover as Supply Grows, KPMG Says

Metals and mineral prices are unlikely to recover in the next five years as new projects will add supply at a time of tepid demand, according to KPMG LLP’s global head of mining.

A decline in the growth rates of Asian economies as new projects begin production means the metals market is imbalanced, Wayne Jansen said. As a result, companies are deferring investments, he said.

“You are not going to see a massive change in commodities prices overnight,” Jansen said in an interview in Rio de Janeiro yesterday. “We will have fairly flat prices for the next five years.”

Prices of iron ore, the key raw material to produce steel, tumbled to a three-year low on Sept. 5 as China, the biggest consumer, heads toward its slowest economic growth since 1999, according to the median estimate of economists surveyed by Bloomberg. Nickel dropped about 26 percent since reaching its highest this year on Feb. 7.

“There has been a lot of capacity that has been effectively built up through projects that are now starting to come on stream,” Jansen said. “This is a long-term game.”

To contact the reporter on this story: Juan Pablo Spinetto in Rio de Janeiro at jspinetto@bloomberg.net

To contact the editor responsible for this story: James Attwood at jattwood3@bloomberg.net