Base Metals Supply Surplus to Shrink in 2009
The base metal supply surplus in 2008 will shrink this year, according to a forecast released by the World Bureau of Metal Statistics (WBMS) in London.
WBMS data shows that in 2008 the copper surplus almost doubled to 329,000 metric tons from a revised glut of 161,000 metric tons in 2007. World refined copper production rose 2.8% to 18.48 million metric tons last year while consumption was 18.16 million metric tons.
WBMS data, showing the world lead market recorded a slight surplus of less than 3,000 metric tons last year, compared with a deficit of 203,000 in 2007. Aluminium was in surplus by just over a million tons, zinc output outpaced use by 185,000 metric tons and the tin market was in deficit by 4,300 metric tons last year.
Also, the surplus of nickel was recorded at 54,100 metric tons, according to WBMS, with refined production at 1.37 million metric tons and use at 1.32 million because of the world slowdown in stainless steel production.
Those surpluses created a 21% decline in base metals prices last year including of copper, aluminum, lead, zinc, nickel and tin.
But the level of base metals surplus is expected to decline this year, say analysts such as Gayle Berry at Barclays Capital in London. Berry tells Purchasing.com that 2009 could be a year of reduced surpluses, although she sees no chance for a pickup in base metals prices. In fact, the consensus of analysts polled by Purchasing.com sees the 21% price drop of last year expanding to a 44% decline in base metals prices this year because of collapsed demand.
“There are ongoing and rapid adjustments to supply for the base metals,” Berry says, noting that cutbacks in production are worldwide. “However, perhaps of even greater significance are the huge reductions in capital spending plans.”
WBMS data shows that in 2008 the copper surplus almost doubled to 329,000 metric tons from a revised glut of 161,000 metric tons in 2007. World refined copper production rose 2.8% to 18.48 million metric tons last year while consumption was 18.16 million metric tons.
WBMS data, showing the world lead market recorded a slight surplus of less than 3,000 metric tons last year, compared with a deficit of 203,000 in 2007. Aluminium was in surplus by just over a million tons, zinc output outpaced use by 185,000 metric tons and the tin market was in deficit by 4,300 metric tons last year.
Also, the surplus of nickel was recorded at 54,100 metric tons, according to WBMS, with refined production at 1.37 million metric tons and use at 1.32 million because of the world slowdown in stainless steel production.
Those surpluses created a 21% decline in base metals prices last year including of copper, aluminum, lead, zinc, nickel and tin.
But the level of base metals surplus is expected to decline this year, say analysts such as Gayle Berry at Barclays Capital in London. Berry tells Purchasing.com that 2009 could be a year of reduced surpluses, although she sees no chance for a pickup in base metals prices. In fact, the consensus of analysts polled by Purchasing.com sees the 21% price drop of last year expanding to a 44% decline in base metals prices this year because of collapsed demand.
“There are ongoing and rapid adjustments to supply for the base metals,” Berry says, noting that cutbacks in production are worldwide. “However, perhaps of even greater significance are the huge reductions in capital spending plans.”
By Tom Stundza -- source: www.purchasing.com
