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Industrial Metals Prices to Climb 15 Percent, South Korea Says
Jan 21,2010 14:46CST
industry news

SEOUL, Jan. 21 -- South Korea, Asia's third-biggest buyer of base metals, forecast that average prices may gain by more than 15 percent in 2010 as the global economy recovers, and said it plans a further boost to the nation's reserves.

The Public Procurement Service, the state-run body that manages strategic commodities, plans to expand stockpiling of aluminum, copper and other metals this year by five days to 53 days of consumption, Administrator Kwon Tae Kyun said. Last year, reserves rose by the equivalent of 21 days, Kwon said today.

An index of the metals traded on the London Metal Exchange almost doubled last year, buoyed by stimulus spending as governments worldwide battled the global recession. South Korea relies on imports for 97 percent of its raw-material needs.

"Prices of major non-ferrous metals may rise more than 15 percent this year as the global economy recovers, and uncertainties may increase volatility," Kwon said at a seminar. "Given higher prices, we may not expand reserves as much as we did last year. But still, we will increase stockpiles" as the economy has not fully recovered yet, he said.

Copper for immediate delivery, the best performer last year among contracts of that maturity, will average $7,138 a metric ton on the London Metal Exchange in 2010, according to the median of 23 analysts surveyed by Bloomberg News. That's 38 percent more than last year's average.

Global Recovery

The World Bank yesterday raised its forecast for global growth this year, while warning the recovery may lose momentum in the second half as stimulus programs end, according to its annual report. Growth may be 2.7 percent this year, compared with an estimate last June of a 2 percent expansion, it said.

The Public Procurement Service's stockpile of rare metals including lithium, used in rechargeable batteries, will gain to 60 days of demand this year from 57 days last year, Kwon said. That will meet the 60-day mark two years earlier than planned, he said.

The agency plans to pursue joint stockpiling with private- sector companies, Kwon said. "Pension funds may get interested in the business, given yields on the state stockpiling over the past three to four years," he said, without giving details.

The service, which has 2,000 to 3,000 small and medium- sized companies as customers, had said it will expand overall reserves, including both base and rare metals, to 60 days of consumption by 2012.

The agency stockpiles mostly non-ferrous metals, buying when global prices drop and releasing some supply when the market gains. It meets about 8 percent of the country's metals demand, often setting benchmark local prices.


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