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S&P announces significant cut in metals price forecasts for 2015-2017
Jan 22,2015 16:47CST
industry news
Source:SMM
The global rating agency Standard & Poor’s has revised its metal price forecasts for 2015-2017. The agency lowered its price forecast for all key commodities.

Author: Paul Ploumis22 Jan 2015 Last updated at 02:47:16 GMT

SEATTLE (Scrap Monster): The global rating agency Standard & Poor’s has revised its metal price forecasts for 2015-2017. The agency lowered its price forecast for all key commodities. The iron ore and copper price forecasts witnessed significant downward revisions.

According to S&P, the agency is likely to come up with some negative ratings action and outlook changes over the next two weeks, as the portfolio of credits are reviewed. Most of the industrial metals may see erosion in prices on account of weaker supply-demand balances. The decline in production costs may also result in lower prices for key commodities.

The iron ore price forecast has been cut by nearly 20% from the earlier forecast of $85 per mt for 2015 and 2016 made in last October. It now assumes the iron ore price to average at $65 per mt during 2015 and 2016. The prices are likely to rise marginally by $5 per mt to $70 per mt in 2017. This is the third cut in iron ore price forecast during the past one year. The agency had predicted iron ore prices at $100 per mt during early 2014.

The cut in production effected by a few high-cost producers on account of declining prices will be balanced with fresh supply from major iron ore producers. It expects nearly 100 million mt of seaborne supply to hit the market in 2015. The rise in supply together with waning Chinese demand growth may limit any potential recovery in prices.

The copper forecast for 2015-2017 has been reduced to $2.70/lb from the earlier forecast of $3.10/lb. S&P anticipates further fall in copper demand on account of fears of slow economic growth by Asian countries. The sharp drop in currencies of copper producing countries against the US dollar may bring down the production costs for copper, it notes.

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