The Cannacord Mining MassacreThe Canaccord mining massacre
In copper, the flagship base metal, they expect prices to continue falling because strong surpluses of more than 400,000 tonnes are anticipated in 2009 and 2010. An average price of US$2.00 a pound is expected in 2009 and 2010, and they noted that the bottom of the cycle has not been reached.
For nickel, meanwhile, they noted that the market is likely to remain in "significant over-supply" in the near-to-medium term, a result of the vicious supply-side response that happened after it soared to an absurd US$24.00 a pound last year. They expect an average price of US$6.50 a pound next year and US$7.00 in 2010.
Zinc looks a little better. More production cuts are needed but the bottom appears close, they wrote. They expect US77.5¢ a pound in 2009 and US90¢ in 2010.
They also cut coking coal, but believe the market is essentially balanced despite some downside risk.
Put it all together and it comes as no surprise that Mr. Lampard and Mr. Wowkodaw are slashing the equities they cover to far lower levels to reflect the diminished expectations for the sector. That goes for big names like Teck Cominco Ltd. and Freeport-McMoran Copper & Gold Inc. to small-cap players like Centenario Copper Corp. and Grande Cache Coal Corp.
Peter Koven