Forecasts for 2011.The third paragraph refers to JP Morgan Chase+Co who today bought 50% of the LME copper inventory for a new ETF they are starting. Other companies preparing to launch copper ETF include Blackrock Inc and ETF Securities Ltd. If these ETF do for copper what ETF's did for gold, things will really be looking up for Ursa.
Montréal—(Kitco News) Base metals prices are expected to rise in the New Year as tighter supply and rising demand is forecasted to drive prices said Citigroup, the U.S. –based financial service company on Wednesday.
Although Chinese copper demand has tapered off in the past few months, it has still been strong enough to keep prices rising. Demand in the U.S. has been increasing and European auto makers have helped copper consumption with strong demand on their end, Citigroup said.
Another factor that could drive copper prices revolves around speculation of an American holding 50-80% of the cash warrants on LME inventories.
“The bank and investment names mentioned are those thought to be close to launching, or providing material for the launch of, physically backed ETFs,” Citigroup said. “We suspect that ETFs could easily absorb more that 200,000 metric tons of copper over 2011.”
Aluminum supply has been coming from outside of China over the last few months but a drop in Chinese production still pressured prices. However, the Chinese five-year plan of power cutbacks are due to end in a few weeks which are expected to drive Chinese production to record highs, Citigroup said.
Global demand has been improving and LME inventories have been going down but the crucial factor to aluminum’s performance will be affected by China’s new five-year plan which will be released in the coming months.
“We suspect that the Chinese authorities might finally get serious about how to best use the country’s energy supply,” Citigroup said. “We’re not sure that inefficient smelters will fit into that plan.”
Gold prices have benefitted from the current eurozone problems with Greece, and now Ireland. Investor demand will continue to drive prices in 2011. The average price of gold in 2011 is forecasted at $1503.60 an ounce, up $236.20 from 2010’s average.
Silver is not expected to continue its current rise into 2011 as prices are forecast to remain flat. The average price of silver is expected to stay around $29 an ounce in 2011.
Citigroup’s price forecasts are:
Copper - $9,546 per metric ton in 2011, up $1,743 from 2010
Aluminum - $2,584 per metric tonin 2011, up $358 from 2010
Lead - $2,553 per metric ton in 2011, up $424 from 2010
Nickel - $25,245 per metric ton in 2011, up $2,227 from 2010
Tin - $25,957 per metric ton in 2011, up $4,512 from 2010
Zinc - $2,515 per metric in 2011, up $358 from 2010