RBC Capital Markets has raised its price targets for a number of key commodities, including including iron ore, copper and aluminum.
However, the investment firm says its analysis suggests that the zinc market still has the best fundamentals and it remains RBC’s top pick among the base metals.
“Based on our 2017 price forecasts, our preferred commodities are zinc, iron ore, and copper,’’ RBC said in a global metals and mining second quarter 2017 outlook.
According to the report, RBC has raised its 2017 iron ore price target by 25% to US$84.50 per tonne. The targets for copper, aluminum and zinc has also been raised by 10% to US$2.75 a pound, 10% to US$1.35 a pound and 8% to US$83 cents a pound respectively.
However, RBC is less bullish on the outlook for spot coking coal. It has dropped its 2017 forecast by 18% to US$208.75 per tonne.
RBC said it has increased its 2017 and 2019 price forecasts for zinc to reflect a slightly tighter market and lower inventories than it has been previously forecasting. It now expects the price of zinc to average US$1.40 a pound in 2019.
“We believe the market has moved into deficit and will remain in deficit throughout our forecast period, drawing inventories down below critical levels and leading to very strong pricing,’’ RBC said in its report.
Still, it warned that the rate of global economic growth, and Chinese economic growth in particular, remains the key risk to its forecast.
Shares of companies with exposure to zinc include
Teck Resources Ltd. (
TSX: TECK.B,
NYSE: TECK,
Forum).