LME WEEK 2010 - FastMarkets lifts 2010 metals price forecasts, mixed performance seen in 2011

London 11/10/2010 - Base metals prices have rallied from their mid-year lows to significantly higher levels across the board, which will see much higher averages this year than previously thought, although the 2011 outlook is more mixed, FastMarkets analysts said on Monday.

In a third-quarter update, Angus MacMillan and William Adams lifted the tin average a hefty 33 percent for this year to $22,000 per tonne and forecast a $25,000 median in 2011. Tin prices hit all-time highs of $26,790 last week.

For copper, the average was raised 10.6 percent to $7,300, with an average outturn of $8,000 pencilled in for 2011.

"The extent to which they can maintain or build on these gains is a moot point in the still-fragile economic environment affecting most of the major industrialised nations," they said in a special report.

Price forecasts for lead, zinc, nickel and aluminium for this year were lifted by between 7.5 percent and 19 percent but the 2011 projections were all lower.

In the report, FastMarkets said the outlook for the global economy remains distinctly mixed and governmental bodies have expressed grave concerns about the outlook for global growth, noting that central banks may have to provide additional stimulus measures.

"In some cases governments may have to defer plans to cut budget deficits to counter a global slowdown in the second half of the year and beyond,” the analysts said. “This does not bode well for growth in metals demand."

The US economy, still by far the world’s largest, continues to give cause for concern and, although the consensus remains that a double-dip recession will be avoided, it is clear that the rate of growth is slowing.

"There is little question that global growth and metals demand this year will be driven by Brazil, Russia, India and China - the BRIC countries,” they said. “The BRICs have been accounting for an ever-larger proportion of global metal demand over the past decade or so.”

In 2009, they accounted for 48 percent of global aluminium consumption - China alone accounted for 39 percent - compared with 21 percent in 2000.

"We assume for now that a double-dip recession in the global economy will be avoided but there is no doubt that such a development could come to pass,” the analysts said.

For detailed reports on all the metals, please click on the individual articles.

(Editing by Mark Shaw)