--BNP Paribas cuts 2012 copper outlook 6.1% to $8,100/ton
--Reduces its 2013 copper forecast 5.6% to $8,450/ton
--Cites "great uncertainty" over economic situation in Europe
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By Francesca Freeman
French Bank BNP Paribas (BNP.FR) Wednesday lowered its forecasts across all six base metals for this year and next, citing "great uncertainty" over the economic situation in Europe.
The bank now sees copper averaging $8,100 a metric ton this year, a 6.1% reduction to its previous forecast. BNP Paribas cut its third-quarter outlook on copper by a full $1,000, or 11.4%, to $7,775/ton and its fourth-quarter outlook on the metal by 5.6% to $8,450/ton.
In 2013, BNP Paribas expects copper to average $8,000/ton, down 1.5% on its earlier outlook.
"The risks to our forecasts are...tilted heavily to the downside, due above all to the great uncertainty about economic/financial prospects in Europe," said BNP Paribas analyst Stephen Briggs.
"Were the global economic outlook to deteriorate sharply, copper would be the most exposed base metal, not because its fundamentals are relatively poor but because, uniquely, its price is still far above production costs," the bank said.
Tin should outperform the sector over the next two to three quarters and lead will increasingly outpace zinc, said Mr. Briggs.
The bank expects tin to average $22,125/ton this year and $26,000/ton next, a reduction of 10.2% and 3.7% respectively on earlier forecasts. It sees lead averaging $2,055/ton in 2012, down 5.9% on its previous forecast, and $2,550/ton next year, down 3.8%. For zinc, it forecasts an average 2012 price of $1,985/ton and a 2013 price of $2,350/ton, down 4.1% and 1.1% respectively.
Nickel prices should continue to struggle for the remainder of this year and aluminum's progress should be relatively muted, with the metal likely to remain less volatile than other metals in the complex, Mr. Briggs added.
The bank lowered its 2012 aluminum forecast by 8.1% to $2,085/ton and its outlook for next year by 4.9% to $2,450/ton. It cut its 2012 nickel forecast by 6.4% to $18,250/ton and its 2013 nickel outlook by 4.3% to $17,900/ton.
BNP Paribas' price downgrades follow similar moves by other banks this week. Both Goldman Sachs and Societe Generale reduced their forecasts on a range of base metals Monday, citing risks posed to the complex by the euro-zone debt crisis.
Write to Francesca Freeman at [email protected]