\n\tCRU warns that in the case of forecasts suggesting higher prices by 2016, the implication is not for a steady increase, and vice versa on the downside. Volatility will clearly come into play, so readers should view percentage price movements as representing “at 2016” rather than “up\/down to 2016”.<\/p>\n
\n\tCRU's outlook for commodities in general in the medium term is “warm”. The analysts adopt a temperature gauge<\/span> analogy, as is illustrated by the table at the bottom of this article. On average, commodity prices are expected to increase by 8% in 2016 over 2Q12<\/span> which is a small revision from the analysts' 9.5% forecast provided last quarter. The base has also been lowered given the pullback in prices from the first quarter 2012 to the second.<\/p>\n \n\tOf the 24 commodities updated, 13 are expected to be higher in 2016 and 11 lower, which is a significant downgrade from CRU's 2:1 higher ratio set last quarter. The split between the ups and downs represents those commodities expected to be supply constrained and those for which excess capacity is already apparent.<\/p>\n \n\tThe greatest medium-term supply constraints will occur in tin, zinc, alumina, palladium and uranium, the analysts suggest. <\/p>\n \n\tWhile tin consumption is expected to fall in 2012 the market is increasingly under-supplied and there is a lack of new projects in the pipeline. Those projects set to come online will not provide sufficient production and CRU expects a price response from 2013 with supply remaining tight by 2016.<\/p>\n \n\tThe London Metals Exchange (LME<\/span>) traded base metals are expected to regain some of their recent price losses, with the analysts seeing an average 30% upside to 2016 for the six (aluminium<\/span>, copper, lead, nickel, tin, zinc). This average nevertheless takes into account a forecast lower price for copper. Copper should remain tight through 2014 but thereafter the analysts see a significant bulge in new capacity. The 2016 story for copper is similar to the 2012 story for nickel which is currently suffering from a supply surge just as Chinese demand has wavered.<\/p>\n \n\tRussian stock piles of palladium will be depleted by 2014 which will swiftly put the market into deficit thereafter, CRU believes. Palladium will nevertheless be a precious star performer as the analysts see no such upside pressure for all of the group. The “safe haven” metals of gold and silver will not see a collapse in demand in the short term but CRU does not see another gold bull run (unlike many). By 2016 the analysts believe silver, in particular, will lose its lustre<\/span>.<\/p>\n \n\tAn excess of new capacity in fertilisers<\/span> has come on stream recently in low-cost regions. Prices and margins have nevertheless increased for producers recently so CRU does not see its forecast weakness in prices as a disaster for the sector, and the analysts' forecast falls will only bring prices in line with long run averages.<\/p>\n \n\tTo sum up, CRU sees the “hot” commodities as alumina, aluminium<\/span>, lead, nickel, tin, zinc, platinum, palladium, uranium and metallurgical coke. The “warm” commodities are vanadium, diammonium<\/span> phosphate (DAP<\/span>) and cobalt. Iron ore is “cool”, and manganese, copper, gold and coking<\/span> coal are “cold”. The “freezing” commodities are silver, sulphur<\/span>, sulphuric<\/span> acid, potash, ammonia and urea. \n\t \n\tTechnical limitations<\/strong><\/p>\n \n\tIf you are reading this story through a third party distribution channel and you cannot see charts included<\/span>, we apologise<\/span><\/span>, but technical limitations are to blame.<\/em><\/strong><\/p>\n
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