Experts at the LME Metals Annual Meeting believe that the high price of basic metals will continue until the second half of next year
Due to strong economic growth in China, basic metal prices will continue to maintain a strong trend next year, but the growth of metal ore production is expected to limit the increase in metal prices, industry experts at the London Metal Exchange (LME) Metals said so.
Prices of copper, aluminum and zinc have hit new highs in the first half of this year, while nickel and lead prices also hit new highs last week. The global base metal production failed to keep up with the strong growth in demand represented by China, making the base metal prices set a historical record.
At the LME annual meeting concluded on Friday, analysts believe that, despite the strong demand in the United States and Europe, the Chinese factor is a key force for basic metal demand.
“The metal supply is still extremely tight, supporting metal prices at historically high levels,†said Stephen Blig, an analyst at Societe Generale. “The Chinese factor will continue to be the driving force behind metal demand growth.â€
Brig expects that global metal demand will increase by 4% in 2007, slightly lower than 5.0-5.5% this year.
At the same time, metal inventories fell to very low levels this year, and strikes by mining workers in Canada, Chile, and other countries intensified supply and demand conditions. In this context, the base metal prices have soared.
However, analysts at the LME annual meeting also warned that the pattern of supply and demand for base metals will soon change.
The soaring prices of basic metals have brought huge profits to the major mining giants around the world. High returns have also stimulated their investment in the mining sector and explored more metal resources. According to estimates by the bank, the mining company has invested 7 billion US dollars this year for mine exploration. In 2002, this investment was less than $20. According to analysts' estimates, the new mine that will be put into operation next year will be able to meet the global demand for copper, aluminum and zinc, while there may be an excess of lead and tin production. However, the nickel market will continue to maintain the gap between supply and demand next year. This is because stainless steel demand will continue to be strong and will absorb 65% of nickel supply.
According to UBS data analysis, China will continue to be the key to demand growth as China's demand accounts for 1/5 of global copper and zinc demand, 30% of steel demand and 40% of iron ore.
Deutsche Bank analysts predict that by 2020, China will import 20 million tons of copper, which is more than six times the import of 3 million tons this year. By 2010, China’s aluminum consumption will reach a higher level and will no longer be self-sufficient. It is expected that aluminum imports will be needed for the first time since 2001.
In the context of strong demand and economic growth, analysts believe that China will continue to drive growth in demand for basic metals, and that base metal prices will remain high at least until the second half of 2007.Stainless Steel Casters,Medium Duty Caster,Rubber Swivel Casters,Rubber Swivel Caster Wheels
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