Analysts from the French financial services company recently visited China and said the large unreported stock build was generally not perceived to be a problem due to the exceptionally strong demand growth, citing an 18.5% year-on-year increase in industrial production in December.
India was singled out as the biggest growth country for base metals outside China, with its economic prospects considered positive.
However, Natixis said it would be wrong to focus only on China and India, with industrial production rapidly growing in several Asian countries.
London Metal Exchange inventories appeared to be peaking, further adding weight to the forecasted price rises.
Global copper usage is tipped to rise 8.4%, with the analysts tipping copper to move into a 142,000-tonne deficit this year, after a 393,000t surplus in 2009.
Natixis bases the forecast on Chinese producers with smelter capacity being keen to secure additional sources of ores and concentrates, with little growth in mine output expected due to technical difficulties, labour-related disruptions and price-related cutbacks earlier in 2009.
It was feared that Saturday’s earthquake in Chile would impact production, but the major mines resumed operations within days.
After copper prices averaged $US6952 per tonne in 2008 and $5164/t in 2009, Natixis is tipping a 52.7% rise in the average 2010 price to $7885/t.
“If investment demand does persist, fuelled by stronger than expected growth in consumption inside and outside China, we would not be surprised to see prices move as high as $8200 per tonne in 2010,” the company said.
Copper is expected to average $8476/t next year.
Despite higher forecast output, zinc demand is expected to grow by 10% in 2010, supporting an average price of $2800/t, a 68.8% increase on last year.
The lack of new zinc mine developments and the closure of Xstrata’s large Brunswick zinc mine later this year is expected to lead to a deficit of more than 200,000t.
Natixis is tipping zinc to average $3060/t in 2011.
Nickel demand is also expected to rebound up to 10% in the second half of this year, leading to a return to deficit next year for the first time since 2006.
The expected recovery of the stainless steel industry will aid nickel’s comeback.
A small surplus of 16,000t is forecast for 2010, with prices to average $19,340/t, a 31.6% increase on 2009’s average price of $14,700/t.
Natixis believes the ongoing global financial recovery, combined with unhelpful fundamentals, will lead to an unwinding in investor interest in gold and silver.
“On the supply side, for instance, mine production is forecast to grow and the market will have to digest the IMF’s sale of its remaining 191 tonnes,” the analysts said, referring to the International Monetary Fund’s gold sales program.
Gold and silver are the only metals Natixis is predicting will fall in 2010 and 2011.
In 2010, gold is expected to average $950 per ounce before dropping a further 10% to $850/oz next year.
Silver is tipped to fall to $13.30/oz next year from an average $15/oz this year.
Consumption of platinum group metals is likely to rise, as is the price of platinum and palladium.
Natixis forecasts platinum to rise 28.7% to $1550/oz this year and palladium to jump 37.5% to $363/oz.
Tin should reach $17,500/t this year and $18,000/t next year as 2009’s 19,000t surplus dwindles, while improved battery demand bodes well for lead, with the metal expected to trade at around $2565/t this year before rising again to $3075/t.
