BNP Paribas Cuts 2011 Base Metals Prices On Economic Outlook

LONDON -(Dow Jones)- Investment bank BNP Paribas SA (BNP.FR) Wednesday lowered its forecast for base metal prices after it cut its world economic growth forecast for 2011 and 2012.

BNP Paribas didn't disclose its economic growth forecast for 2011 in its latest commodities report but said it expects global growth to grow at 3.4% in 2012.

"Base metals have been rather weaker in the third quarter than we had expected, but relative performance within the sector has been broadly as expected," Stephen Briggs, senior metals strategist at BNP Paribas, said in a report, noting that after base metals prices fell 4% in the second quarter, average prices look set to decline by at least 5% in the third quarter.

The bank cut its forecasts for this year for the entire base metal complex, while also downgrading its full-year 2012 outlook for copper, lead, tin and zinc. It also downgraded its 2013 outlook for aluminum, lead and zinc.

BNP Paribas now sees flagship copper average at $9,240 a metric ton this year, a 2.3% downward revision to its previous forecast of $9,450/ton. It also cut its 2012 forecast to $9,150/ton from $9,300/ton. However, the bank raised its 2013 average price forecast for the red metal to $8,100/ton from $8,000/ton. It lowered its copper forecast for the fourth quarter of this year almost 7% to $9,050/ton from $9,700/ton previously.

"We expect copper to regain traction in 4Q11 before it peaks by mid-2012 due to likely faster production growth," said Briggs.

Lead's outlook for this year was reduced to $2,530/ton from $2,675/ton, its 2012 forecast dropped to $2,750/ton from $3,025/ton and its 2013 forecasts cut to $3,100/ton from $3,225/ton. Likewise, BNP Paribas cut zinc's 2011 forecast to $2,270/ton from $2,360/ton, its 2012 forecast to $2,375/ton from $2,650/ton and reduced its average price outlook for 2013 to $2,725/ton from $2,950/ton.

BNP Paribas reduced its 2011 outlook for tin to $27,225/ton from $27,625/ton and its 2012 forecast to $29,000/ton from $29,925/ton. While Nickel's average price forecast for this year was cut to $23,975/ton from $23,975/ton, its outlook for 2012 was raised to $21,600/ton from $21,500/ton.

Aluminum's average price forecast for this year was reduced to $2,485/ton from $2,505/ton, while its 2013 outlook was cut to $2,825/ton from $2,850/ton.