World Bank raises 2017 price out­look for oil, met­als

Chronicle (Zimbabwe) - - Business Chronicle -

THE World Bank has in­creased its 2017 price out­look for both met­als and oil in its lat­est ‘Com­mod­ity Mar­kets Out­look’, rais­ing its Oc­to­ber fore­cast for crude oil to $55/bl, from $53/bl in July. It has, how­ever, sus­tained its fore­cast for an av­er­age oil price of $43/bl in 2016. En­ergy prices, which in­clude oil, nat­u­ral gas and coal, are pro­jected to jump al­most 25 per­cent over­all next year, with coal prices ex­pected to av­er­age $58/t in 2016, de­spite a 30 per­cent surge in ther­mal coal prices dur­ing third quar­ter of 2016.

The re­cent in­crease in coal prices to above $65/t was at­trib­uted to strong de­mand and tight­en­ing sup­ply in China as a re­sult of gov­ern­ment re­stric­tions on pro­duc­tion and ad­verse weather con­di­tions.

How­ever, the bank ex­pects coal prices to re­duce dur­ing 2017 on the back of sup­ply ad­di­tions and weak de­mand.

“China’s coal pol­icy will be key, given that the coun­try con­sumes half of the world’s coal out­put and coal ac­counts for nearly two-thirds of the coun­try’s en­ergy con­sump­tion.”

Met­als prices are pro­jected to rise more sharply in 2017 than fore­cast in July, as a re­sult of faster-thanex­pected mine clo­sures.

Met­als prices rose by four per­cent in the third quar­ter, the se­cond con­sec­u­tive quar­terly gain, on sup­ply con­straints, strong de­mand and fall­ing stocks.

“Iron ore, nickel, tin and zinc have risen by more than 20 per­cent over the past two quar­ters on var­i­ous sup­ply short­falls, while the two largest con­sumed met­als —alu­minum and cop­per — have seen more mod­est gains on am­ple sup­ply and ris­ing ca­pac­ity,” the bank stated.

Zinc prices recorded the strong­est gains in 2016, ris­ing 50 per­cent from Jan­uary to Septem­ber, ow­ing to on­go­ing sup­ply tight­ness as a re­sult of mine clo­sures and vol­un­tary pro­duc­tion cuts, amidst strong steel de­mand.

“In 2017 met­als prices are pro­jected to in­crease by four per­cent as most mar­kets con­tinue to re­bal­ance. The largest gain is for zinc, which is pro­jected to rise more than 20 per­cent, on con­tin­ued sup­ply tight­en­ing from large mine clo­sures.”

Mean­while, pre­cious met­als prices, which rose eight per­cent in the third quar­ter on strong in­vest­ment de­mand and safe-haven buy­ing, have in­creased by more than 20 per­cent this year.

Sil­ver led the way, surg­ing 16 per­cent, on strong investor and in­dus­trial de­mand, fol­lowed by plat­inum, up eight per­cent, on South African rand ap­pre­ci­a­tion and tight­en­ing phys­i­cal sup­ply. Gold prices lagged these in­creases, but nev­er­the­less rose six per­cent to av­er­age $1 335/oz.

“Pre­cious met­als prices are pro­jected to rise seven per­cent in 2016, mainly due to stronger in­vest­ment de­mand,” the bank said. — min­ing­weekly

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