Copper and aluminium prices could fall later this year on improved supply and slowdown in demand.
London based Natixis Commodity Markets (NCM) feels prices would continue to fall as tight supply had maintained prices so far but output growth would start to accelerate.
?While supply was easing, demand was falling, especially for metals linked to residential building activity such as aluminium extrusions and copper tube. As the global economic downturn spread to the non-residential sector and the motor industry was also being affected, demand for other products was declining,? NCM said in its third-quarter of 2008 Metals Review.
The firm expected copper would average $8,250 a tonne this year and $7,250 next year as the market surplus grew.
NCM forecasts average prices of aluminium around $3,000 a tonne in both 2008 and 2009. Lead could fall to $1,750 a tonne next year from $2,000 this year and nickel to $21,000 from $24,600 a tonne.
Tighter supply in the copper market was the key driver in the first half of the year. In the second half, the weak demand environment is more likely to come into play. As such, the broking firm is projecting a slightly higher surplus of 75,000 tonne, up from our previous forecast of 25,000 tonne.