Hong Kong 13/06/2016 - A significant recovery in metal prices is still around 12 months away while instability and the lack of supply response continue to weigh on prices, Sucden Financial non-executive director Jeremy Goldwyn said.
Economic threats such as a potential Brexit, uncertainty about the interest rates and forthcoming US elections add to the instability, while producers continue to push out metal, he told FastMarkets at LME Week Asia here on Monday.
While metal prices have recovered from the lows earlier this year, sentiment remains weak and most of the complex - with the exception of zinc - are holding around multi-year lows.
"[There is] plenty of metal around... I originally thought a year ago that by the end of this year it would start to pick up. Now I don't think so - I think it's still another year away," Goldwyn said.
If stability remains, the copper price would range around $4,200-$5,200 over the next six-18 month because the fundamentals are effectively unchanged, he added.
Historically, there is a supply-side reaction to counter a downtrend but despite some production cuts there has not been enough to make a substantial difference.
"There has still not been enough blood spilt – it is staggering to think prices have come off and no one has died. Either that means a deep spike to drive a few people out or you have another 18 months of this grinding," he said.
As well, price moves in other commodities such as iron ore and oil could have ramifications for other markets. Crude oil prices pushed back above $50 per barrel earlier this month but the upside is limited from here, Goldwyn said, while the downward trend in the iron ore price could resume after the recent "artificial" rally.
"It's hard to see why the metals should be buoyant in that environment," he said.
(Editing by Mark Shaw)