Goldman Cuts Aluminum Forecast on Weaker Developed Economies

 

　　The metal will trade at $1.18 a pound next year, down from a previous forecast of $1.28, and before rebounding to $1.22 in 2013, below an earlier estimate of $1.30, Goldman analysts Sal Tharani and Sandeep SM said in a report dated today. The 2011 forecast was lowered to $1.16 from $1.18.

 

　　Aluminum has the highest “beta” to global economic growth, and “thus could be most impacted by macro weakness,” the analysts wrote. “We do not expect a major leg down in aluminum price as it is already trading at close to its marginal cost.”

 

　　Copper is favored by Goldman because of its “superb supply-demand fundamentals,” according to the report.

 

　　“Copper-supply disruptions will amount to at least 8 percent of total production loss this year, compared to 4 percent to 5 percent we had expected earlier in the year,” Tharani and SM wrote. “Chinese warehouses have significantly depleted their copper stocks, and opening of positive arbitrage between the China and London Metal Exchange prices could mean increase in copper imports into China.”

 

　　Demand for industrial metals will remain “fairly healthy, driven by emerging markets,” they said.