LONDON (Commodity Online): The price gains in base metals complex may be limited by higher inventories and excess capacity in 2013 coming close on the heels of a disappointing market in 2012, according to Natixis.

“In particular, the disappointing pace of growth last year led to a rise in stockpiles of most base metals, which may limit potential price gains in 2013. Our optimism regarding growth across the developing world suggests that base metal prices can rise this year, even if this price appreciation is likely to be limited by high inventories and excess capacity for many metals.”

Potential downside risks exist with respect to China growth, US economic recovery and even though the worse may be over the for Europe’s fiscal crisis, Natixis said. 

“Amid the chaos in Europe over the past three years, we may have become too complacent about the economic and political risks in developing countries. Across the developing world, debt issuance has expanded rapidly in recent years as investors have sought alternatives to low-yield/high-risk debt from European countries. As these bonds mature in coming years, there is substantial scope for disappointment among investors who were seeking yield enhancement through diversification into these new markets.”

Natixis forecast for metals for 2013-14
Aluminium: 2013: $2125/ton; 2014: 2,250 per ton
Copper : 2013: $8500/ton; 2014: $7500/ton
Lead: 2013:$2575/ton, 2015: 2725 per ton
Nickel: 2013: $18750 per ton, 2014: 19500/ton
Zinc: 2013: $2150/ton, 2014: $2200/ton