Haywood Securities lowers base metal forecasts

Haywood Securities has cut its base metal price forecasts for 2020 due to the COVID-19 pandemic.

The investment dealer expects copper will cost US$2.45 per lb. (from its previous estimate of US$2.90 per lb.) and forecasts a copper surplus this year of up to 1 million tonnes “in what had been expected to be a balanced market.”

“While production disruptions in key producer countries will remove significant volumes from the market, we still expect meaningful copper oversupply, as the loss of demand will likely be greater than the decline in supply due to the coronavirus-related disruption,” Haywood’s Pierre Vaillancourt wrote in a research report released today.

The mining analyst noted that copper “had its worst quarter since September 2011, and fell 22% (US$2.83 per lb. to US$2.23 per lb.), from an already low base because of the U.S.-China trade war.”

For zinc, Vaillancourt has cut his 2020 price forecast to US90¢ per lb. from US$1.15 per lb., and for nickel to US$5.65 per lb. from US$7.00 per pound. He has also trimmed his forecast for lead to US80¢ per lb. from US95¢ per pound.

“Looking further out, copper has been adjusted down to US$2.60 per lb. from US$3.00 per lb. in 2021, to US$2.80 per lb. from US$3.10 per lb. in 2022, and to US$2.80 per lb. from US$3.15 per lb. in 2023,” the report stated.

“Zinc has been adjusted to US$1.10 per lb. from US$1.15 per lb. in 2021, but remains at US$1.10 per lb. longer-term, and nickel has been reduced to US$6.00 per lb. and US$6.50 per lb. in 2021 and 2022, but remains at US$7.00 per lb. longer-term.”