Base metal prices rose 3.5% in February, but are 19% lower than a year ago, according to a National Australia Bank economist.
Metals prices are down up to 28% on 12 months ago, with aluminium down 12%, copper down 15%, lead down 18%, nickel down 28% and zinc down 19%, NAB’S Michael Creed says.
He says metals prices managed to hold on to most of the gains seen since the start of the year on the back of positive United States economic data.
“Chinese seaborne demand for commodities remained quite strong at the start of the year. However, much of this has wound up in warehouses, while end-use demand appears to be softening,” Creed says.
Rising concerns over the Chinese growth outlook in 2012 have weighed on prices recently but copper stocks on the Shanghai futures exchange have rallied since the beginning of 2012 and are now around their highest levels in almost 10 years.
“Factoring in price rises observed over the March quarter to date, the NAB Base Metals Index (BMI) is expected to rise by around 8% in the quarter. Over 2012, prices are expected to track broadly sideways but with volatility, to be around 7% higher over the year,” he said.
Creed said oil prices would remain steady as the market remained balanced between geo-political tensions, primarily caused in Iran, and weak demand. He said Australian petrol prices were expected to ease on expected on the Singapore market, and would be partially offset by a weaker Australian dollar.