- Bank cuts metals forecasts as China's recovery postponed
- LME index of metals declines for fourth month in August
Industrial metals face at least six months of stagnation as market conditions in China deteriorate and low prices are needed to curb supply, Standard Chartered Plc said, slashing forecasts for this year and next.
The bank cut its price outlook across base metals, lowering the prediction for copper in the fourth quarter by 28 percent and for aluminum by 24 percent. China’s supply-chain activity will remain constrained at least until the Lunar New Year holiday in February, it said.
“We now expect conditions to deteriorate further this year,” analysts Nicholas Snowdon and Paul Horsnell wrote in a note dated Sept. 1. “The key balancing act for price dynamics will likely have to come from the supply side.”
Standard Chartered joins Australia & New Zealand Banking Group Ltd. in cutting forecasts after prices slumped because of a slowdown in China, the world’s biggest consumer. The London Metal Exchange index of six base metals fell for a fourth month in August as copper and aluminum plunged to six-year lows. Aluminum production needs to decline, while nickel and zinc inventories have to shrink before prices recover, Standard Chartered said.
“Copper is the only metal where peak supply is on the horizon and visible stocks remain low, suggesting that it is the best placed to outperform from the price lows achieved in the next two quarters,” the analysts wrote.