Moody's global base metals outlook remains stable

The outlook for the global base metals industry remains stable, said the Investors Service of Moody's, an international credit rating agency, in a report released Monday. Average prices for aluminum, copper, nickel and zinc will remain near 2013 levels in the next 12 to 18 months, but will continue to show volatility, said the Moody's report entitled "Slow Global Recovery Will Keep Base Metals Prices Range Bound." Global demand for base metals, however, will grow modestly, and "recovery will be uneven," Moody's said, adding that Industrial production will remain the main driver of growth. Geologically, demand will grow at mid-single-digit rates in Asia, improve slowly in United States and Latin America, but remain sluggish in Europe, the agency said. It said the Chinese economy is likely to grow moderately in line with the 2013 rate. Carol Cowan, vice president and senior credit officer at Moody's, said that the continued slow global economic growth, surplus inventory and investors' subdued interest in the metals commodity sector will prevent any material upward movement in prices in the next year or so. "We believe 2013's price decline has bottomed, but prices in 2014 will on average be lower than 2013 levels," said Cowan. The credit rating agency expected prices for copper to average at most 3.00 U.S. dollars per pound and for aluminum to average 0.80 dollar per pound next year. Cowan forecast that producers of base metals will focus on cost savings and capital discipline in 2014. "Operating cost increases will moderate, while cost-saving initiatives will help mitigate the impact of lower prices," he said. Fuel, energy and labor costs would continue to rise, though not as much as they have in recent years, and base metals producers would scrutinize investment projects more closely, said Cowan.