Tin has the best outlook among the six main industrial metals on the London Metal Exchange (LME) because of shortages, while copper is entering a "sustained period of oversupply", according to Standard Bank.
Refined tin will be in deficit through 2016 while copper, aluminium and zinc are oversupplied, the bank said in a report on Monday. Tin and lead are poised for "bullish price surprises," according to the report.
"Of all the base metals, we are most bullish on the fundamentals of the tin market, due to structural supply shortages and a lack of enough advanced mining projects to remedy the problem in the foreseeable future," Leon Westgate, an analyst at the bank in London, wrote in the report. Tin will average $28 000 a metric ton next year, from $22 655 a ton in 2013, Westgate wrote.
Tin is the best performer on the LME this year, climbing 0.9% to $23 620 a ton by 7am in London on Monday, amid concerns of limited supplies from Indonesia, the largest exporter.
Copper prices will slide through 2015, averaging $7 400 a ton this year, $7 200 a ton in 2014 and $6 900 a ton in 2015 before rebounding to $7 400 a ton in 2016, according to the report. The metal used in pipes and wires fell 8.6% this year on the LME. "Copper, so long the poster boy of the base metals bull market, will enter a sustained period of oversupply," Westgate wrote. "There seems no stopping the red tide of new supply that is coming." Copper supply will exceed demand through at least 2016, with the surplus at 292 000 tons next year, he said.
Premiums for copper
The zinc oversupply will shrink to 43 000 tons in 2016 from 278 000 tons this year, according to the report.
Annual contract premiums for copper will rise next year while fees on the spot market will decline because of shorter waits for metal from warehouses and oversupply, Standard Bank said.
Annual treatment and refining charges will be $90 to $100 a ton, and 9 cents to 10 cents a pound, it said. The charges are $70 a ton and 7 cents a pound this year.
Standard Bank cut its estimates for aluminium prices through 2016 because of oversupply, it said. Aluminium will average $1 845 a ton next year, $1 950 a ton in 2015 and $2 300 in 2016, the bank said. The surplus will be 369 000 tons in 2016, the 10th year of oversupply in a row, according to Standard Bank. – Bloomberg