Credit Suisse has cut its prices forecast for thermal coal at Australia‘s Newcastle port, saying that it expects prices to remain under pressure before output cuts are able to balance oversupply.
Business Week reports that the bank said in a report on Wednesday that prices for delivery this year will be an average of $98 per metric ton, 13 percent less than their forecast in April.
Analysts including Andrew Shaw, head of base-metals and bulk-commodities research at the company’s Singapore location stated in a report that:
“Tentative signs of supply discipline have begun to emerge but more significant cutbacks and project deferrals will need to emerge. Though the market is currently oversupplied, demand growth in the coming years will still require significant supply side additions and, at current prices, miners do not face sufficient incentives to invest in these requisite projects.”
Market Watch reports that Credit Suisse went on to say that:
“While the outlook remains highly uncertain, we expect prices to remain around their current level over the second half of the year, before recovering modestly over 2013.”
The bank also spoke about gold prices, according to Reuters, indicating that “Growing concerns about debt deflation in an environment in which policymakers are seen to have run out of effective monetary policy ammunition” and also a marked improvement in global growth prospects are two scenarios that would cause gold to perform poorly.
Along with cutting down thermal coal price projections, the bank also cut its copper forecast for 2012 from $8,980/MT down to $7,747/MT, adding that:
“We now think copper will experience a much milder price cycle ahead than we had envisaged under more positive global economic expectations.”
However, their outlook was not completely bleak, as Reuters reports Credit Suisse analysts predicted:
“Moving into 2013, our economists expect global growth to rebound to around 4 percent. In turn, we expect commodity prices to gradually move higher over the course of next year.”