Zinc, Lead Price Forecasts Through 2015: Expect Deficits

Our analysis of the analysts continues! Catch up with Part One here if you haven’t already.

The cash aluminum price is seen averaging $1,840 a ton this year, according to 31 analysts, down from previous forecasts of $1,885, and slightly lower than average 2013 cash prices of $1,844.95 a ton.

Next year, aluminum prices are seen at $1,984.10 a ton, coinciding with a further tightening of the surplus to 500,000 tons in 2015, although with the stock and finance game in full swing, it is difficult to call the market in deficit.

Only Barclays is in dispute with this picture, predicting a 1-million-ton deficit and a high price of $2,150 per ton by 2015. Before you dismiss them, bear in mind Barclays’ Gayle Berry has the most accurate forecast for last year’s aluminum price of all those participating:


Copper, on the other hand, is expected to fall.

The median forecast is for LME cash copper to decline by 4.2% to an average $7,013 per ton in 2014 and by a further 2.3% to $6,855 per ton in 2015. Not one of the analysts submitting a market balance forecast expects deficit in either year.

As the graphs show, though, not all is good news for metal buyers. Zinc, after years in surplus, is expected to face a more constrained supply market as major mines finally close; not a deficit, but reduced surplus is expected to be enough to lift prices this year and next. The median forecast is for cash zinc prices to rise by 15.3% to an average $2,200 per ton and for its sister metal, lead, to rise by 11.5% to an average $2,387 per ton in 2015.


Perversely, lead is already estimated by the ILZSG to already be in balance and the median analyst forecast is for a 22,000-ton deficit this year followed by a 51,000-ton deficit in 2015, yet prices will rise less than for surplus zinc.

Not all sources agree, however. A Business Monitor report from last month has zinc falling this year, although much less than copper, but has lead and aluminum rising on average about 4-5%.


So what’s the takeaway for metals buyers?

The analysts seem to agree that we will not be seeing strong upward or downward trends in the average price levels this year compared to 2010-12.

But considerable risks to the supply side, perception of supply risks, and the ongoing stock and finance trade depriving both the aluminum and zinc markets of metal will cause unpredictability and month-to-month volatility that will need to be managed if consumers are not to be caught on the wrong side of investor-driven volatility.

Don’t miss this free download of our Monthly MMI® Report, covering price trends in 10 metals markets.

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