The Analysis of Metal Markets and Future Prices

The methods used by the Anglo American Corporation for analysis of long-term metal markets and prices are described. The principal factors affecting the relationships between production costs and metal prices are analysed. These are firstly the type of market, - speculative or consumer commodity, free market or subject to price control; and secondly the rate of growth of demand for the metal. It is shown that virtually all metals will have relatively low rates of demand growth for the foreseeable future, due to market saturation, increased economisation, substitution and product obsolescence. Metal prices have a clear dependance on production costs, however forecasting future costs is by no means simple; amongst other things, account must be taken of changing exchange rates, inflation rates, and the potential for operating more efficiently. The paper concludes by giving brief assessments of the long-term future for aluminium, copper, zinc, nickel and tin.