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Goldman Sachs Prefers Copper, Palladium, Metallurgical Coal

Goldman Sachs Group Inc. said its most preferred mining commodities this year are copper, palladium and metallurgical coal, while aluminum and nickel are among the least favored.

The bank kept its average copper price forecast at $8,458 a metric ton this year and raised next year’s to $7,250 a ton from $7,017, according to an e-mailed report today. Goldman lowered its aluminum prediction to $2,050 a ton for 2014 from $2,204, on rising supply growth, and cut zinc to $2,175 a ton from $2,326 a ton on lower-than-expected marginal Chinese output costs.

Goldman Sachs has turned “neutral” on commodities, forecasting a 5 percent return this year after the S&P GSCI gauge of 24 commodities gained 0.3 percent last year. Morgan Stanley said in December gold and silver were among its best picks and was bearish on aluminum and nickel.

“While we also expect copper-mine supply growth to accelerate to 2.8 percent in 2013, this is not expected to shift the market into a noticeable surplus until 2014,” analysts led by Christian Lelong and Max Layton said.

The bank predicted refined-copper consumption will rise by 8 percent this year in China, the biggest user, compared with growth of 3 percent in 2012, citing late-cycle Chinese construction completions.

Among precious metals, palladium is expected to outperform platinum on automobile-demand growth in markets that use gasoline, a substitution for platinum in diesel markets and tighter emission rules, according to Goldman. The bank raised its forecast for platinum in 2013 to $1,575 per ounce from $1,544, and kept palladium unchanged at $781.

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