Chile cuts 2015 average copper price forecast to $2.85/lb

 Chilean state copper commission Cochilco cut its forecast on Thursday for 2015 average copper prices to $2.85 per pound, from a prior $3.00 estimate, amid a collapse in commodities prices, a strengthening U.S. dollar, and worries about top consumer China.

It also forecast average copper prices of $2.80 per pound in 2016.

Prices for the industrial metal have been hovering near 5-1/2 year lows. Concerns about global economic growth and demand for metals in China, which accounts for 40 percent of global refined copper demand, have kept the pressure on prices.

"The forecast for copper prices this year assumes a recovery in the copper market starting in the second half of the year once prices find an equilibrium, uncertainty about China is dispelled and investors adjust their risk aversion," Cochilco said.

Top copper exporter Chile is expected to produce 6 million tonnes of copper in 2015, said Cochilco, who had previously forecast output of 6.23 million tonnes for the year.

That compares to the 5.78 million tonnes produced in 2014, according to data published earlier in the day by the government's INE statistics agency. 

Cochilco also forecast a surplus in the global copper market of 275,000 tonnes in 2015 and 404,000 tonnes in 2016.

Consensus forecast 2015 gold price average: DOWN

Gold on Thursday plunged more than $30 an ounce as eurozone troubles fade from headlines and the focus shifts to US fundamentals, the rampant dollar and a likely June rise in interest rates.

In heavy trade of more than 22m ounces by lunchtime in New York, gold for delivery in April fell over $35 an ounce or 2.8% from Wednesday's close hitting a low of $1,251.84 an ounce – the lowest in two weeks and the worst trading day in more than a year.

The metal is still trading up nearly $70 or almost 5.5% in 2015, but is down sharply from an intra-day high of $1,307 hit last week.

Gold's gains this year have been ascribed to safe haven buying amid currency turmoil, a slowing global economy, the continuing fallout of the collapse in oil prices and a crisis in the Eurozone.

Norman has been the most accurate forecaster – the outright winner five times and a runner up four times

But with the first hike in more than six year likely at the Fed's June meeting raising the opportunity costs of holding gold because the metal provides no yield, gold traders refocused their attention on fundamental factors.

The consensus forecast seem to be that today's decline was only the beginning and the gold price will trend weaker in 2015 – the third year in a row.

According to a new survey by the London Bullion Market Association of 35 analysts, gold will trade in a narrow band this year to average $1,211 a troy ounce with a range between $1,085 to $1,356 during the year.

Ross Norman of Sharps Pixley is the most bullish analyst with a forecast of $1,321 average and a $1,450 high. Norman has been the most accurate forecaster in recent years coming in as the outright winner five times and a runner up four times.

Adam Myers of Credit Agricole is the most bearish with $950 as an average and a low point of $880. Myers is one of five analysts predicting a dip below $1,000 this year.

Last year analysts were bearish on gold, forecasting a price of $1,219, according to the LBMA. The gold price averaged $1,267 in 2014, some 4% higher than estimated.

Silver, the worst performing of the four metals in 2014, is forecast to increase in price by 2.1%.

Forecasters are more bullish about the prospects of the PGM prices, with platinum predicted to be the best performing with an increase of 5.6% and palladium forecast to increase by 5.3%.

Click here for the full report from the LBMA. 

Sourced from Mining.com

Zinc Prices to Outshine Other Metals in Q1 2015

The price of zinc will perform strongly during Q1 2015 due to favorable market fundamentals, to outshine other metals, Futures Daily said in a research note.  

"Despite the broad sell-off in nonferrous metals market, zinc has held up quite well recently, and zinc will lurch higher once the dollar softens," it foresees.  

China is expected to see a lower growth of zinc output due to tightening ore supply worldwide and acceleration of inefficient capacity elimination in China. Zinc demand in China, reflected by high output of galvanized plate/sheet, is strong. 

Production of galvanized plate/sheet hit a new record high of 4.82 million tonnes in December 2014, thanks to growing consumption in the automobile sector and robust exports.   

Moreover, exchange inventories, both in SHFE and LME, have been falling, which will also give a boost to zinc prices.   

The History Of Global Crises Through The Eyes Of The US Dollar

Which is better: a stronger dollar or a weaker dollar? You decide...

"King Dollar" met Queen Caterpillar this week and awoke the beast of broken narratives that a strong dollar may not be the 'unambiguously good' thing so many proclaim it to be. However, with the rest of the world competitively weakening their currencies (in order to 'help' their economies), we hope the chart above will help readers decide which they prefer... a stronger (US multinational-crushing) dollar or a weak (domestic drag) dollar?

Commexes’ turnover drops 43% to Rs 48.5 lakh cr

Turnover of commodity exchanges fell 43 per cent to Rs 48.54 lakh crore till January 15 this fiscal due to poor participation.

According to the Forward Markets Commission (FMC), these exchanges had generated business worth Rs 85.28 lakh crore between April and January 15 last financial year.

According to the latest data released by the Forward Markets Commission, there was decline in turnover in almost all commodities.

The maximum decline in turnover was reported in bullion, metals, energy and agricultural commodities.

Turnover from bullion fell 54 per cent to Rs 17.17 lakh crore during April-January 15 of this fiscal from Rs 37.39 lakh crore in the year-ago period.

Similarly, the business from base metals like copper declined 39 per cent to Rs 12.48 lakh crore from Rs 20.49 lakh crore, while the turnover from energy items fell 34 per cent to Rs 10.07 lakh crore from Rs 15.14 lakh crore.

Turnover from agriculture commodities dropped 28 per cent to Rs 8.81 lakh crore during the April-January 15 period of this fiscal against Rs 12.25 lakh crore in the same period previous year, the FMC data showed.

Experts said lack of volatility in commodities market and high transaction cost have kept many investors at bay, while the Rs 5,600-crore scam at the commodity spot exchange NSEL has also dented investor confidence.

Currently, there are four national-level and six regional-level commodity exchanges operating in the country.

Zinc and nickel price upside 'imminent': Clarus

There has been a lot of bullish talk in the metals community about zinc and nickel over the past couple of years, as many insiders believe those commodities are poised for a rally. You can include Clarus Securities analyst Mike Bandrowski in that group.

He published a detailed note on Tuesday that suggests zinc and nickel have "imminent" upside and will perform very strongly over the next two years as inventories disappear.

In the case of zinc, Mr. Bandrowski noted the market is already in deficit, and that deficit should get bigger following the closures of the Lisheen and Century mines this year. He said exchange inventories have fallen by more than half over the last two years and should be at "critical" levels later in 2015.

"We believe the lack of funding in zinc mine development and exploration has now caught up with the marketplace and zinc prices will respond in 2015," he said in a note.

"Despite the broad commodity sell-off, zinc has held up quite well, likely an indication of the favourable supply/demand fundamentals."

Nickel has received more attention than zinc due to an Indonesian export ban on raw ore that was imposed a year ago, which removed about 25% to 30% of global nickel supply. The nickel price spiked following the ban, but fell back to earth as inventories dramatically increased.

Mr. Bandrowski's said the inventory spike was partly due to a well-publicized trading scandal in Qingdao, which created disruptions in Chinese nickel stockpiles. He expects inventories to trend lower in early 2015 as Indonesian stockpiles are exhausted in China, and thinks the market is heading toward deficit this year.

"We see a great opportunity for nickel in 2015," he added.

Mr. Bandrowski sees the zinc price rising to US$1.10 a pound this year and US$1.25 in 2016, while nickel is expected to jump to US$11 a pound in 2015 and US$12 in 2016. His top picks among the miners in this space include Lundin Mining Corp., Scorpio Mining Corp, Aldridge Minerals Inc. and Royal Nickel Corp. He also highlighted a few names that he doesn't cover: Talon Metals Corp., Sherritt International Corp., Tinka Resources Ltd. and Goldspike Exploration Inc.

World Bank: Commodities falling like it's 1985

This year may well see a rare occurrence for world commodity markets – a decline in all nine key commodity price indices, says the World Bank’s latest Commodity Markets Outlook, released on Thursday.

Oil prices have seen the most dramatic decline with iron ore a close second, but all commodity categories except beverages and food other than grains, oils and fats were softer last year. This broad-based weakness is expected to continue throughout 2015 says the bank.

Oil enjoyed a rare up day to trade at $47.50 on Thursday after news of the death of the Saudi king, but prices are still down 56% from the most recent high of $108 per barrel in mid-June 2014.

The forecast 3% decline in precious metals will result mainly from waning interest by institutional investors

That's the third largest decline since World War II – previous records of a 7-month decline of 67% were set in 1985–86 and during the global financial crisis in 2008 which saw a 75% drop.

The proximate causes of the steep drop in oil prices, however, have two key similarities with one previous episode according to John Baffes, Senior Economist in the World Bank’s Development Prospects Group:

"Both the current oil price collapse and the one experienced in 1985/86 followed an increase in oil production from unconventional sources and OPEC’s abandonment of price targeting."

The World Bank forecast sees oil prices averaging $53 per barrel in 2015, 45% lower than in 2014. The weakness in oil prices is likely to impact trends in other commodity prices, in particular those of natural gas, fertilizers, and food commodities.

Metal prices are forecast to drop 5.3% in 2015 compared to a 6.6% fall in 2014, while more moderate declines are foreseen for fertilizers and precious metals. A pullback of 2.9% in precious metal prices will result mainly from waning interest by institutional investors.

The moderation in natural gas prices is expected to lead to a 2.1% decrease in fertilizer prices according to the report.

According to the organization next year a recovery in the prices of certain commodities may likely get underway "although the increases will be small compared to the depths already reached."