JP Morgan raises metal forecasts but says prices have passed peaks

LONDON (Thomson Financial) - JP Morgan lifted its price forecasts for all base metals through to 2010, but maintained that prices have already peaked in the current cycle. It sees copper prices averaging 7,056 usd a tonne this year, although by 2010, the bank sees copper at just 3,880 usd. Its previous estimates were 6,519 usd a tonne and 3,000 usd, respectively.For nickel, the bank sees an average price of 39,577 usd a tonne this year, falling to just 14,218 usd by 2010. Its previous estimates were 35,328 usd and 11,000 usd, respectively. "The average decline in base metal prices that we expect from cycle peak out to lower levels in 2010 is a considerable 60 pct," said the bank but added that it now expects a more moderate price declines.The price falls through to 2010 are based on expectations that despite positive demand growth, the supply side is catching up and should start exceeding demand growth from the middle of this year onwards. "The world currently has too much carbon steel production, too much stainless steel production, too much alumina production, too much aluminium production and will very soon have too much nickel production," it said."The same cannot yet be said of some other metals such as copper, lead and zinc, although there is every reason to believe that ... one by one, these other metals will follow suit," it added.The bank sees aluminium prices averaging 2,691 usd a tonne this year compared to just 2,050 usd in 2010. Its previous forecasts stood at 2,574 usd and 1,950 usd, respectively.For lead, an average price of 2,032 usd a tonne is forecast for this year compared to only 841 usd by 2010, while for zinc the forecasts stand at 3,552 usd a tonne and 1,682 usd, respectively.