July 26, 2006 – 8:34AM
The commodity price boom enjoyed by Australia’s miners is about to end with a thud, a new forecast report has warned.
Access Economics, in its latest report on mineral prices, said it expects major retreats in prices for many commodities, including nickel, copper, alumina and lead.
“The consensus among those surveyed … is that this party – the best Australia has seen in a generation – is drawing to a close,” it found.
Access is tipping nickel prices to fall about 45 per cent between now and 2008, with slightly smaller falls for copper, cobalt, alumina, zinc and tin.
“Prices of base metals (excluding zinc), alumina, cobalt, oil and coking coal are expected to fall from their June quarter peaks over the forecast period.
“Prices are expected to fall by more than 15 per cent in each case, while copper prices are expected to fall by more than 40 per cent.”
Lead, platinum and zircon prices are tipped to fall by about 20 per cent.
Access said while prices for most industrial commodities peaked in May, this was partly due to speculators and hedge funds.
It warns this demand could prove fickle, slipping away quickly and leaving prices in free fall.
One of the key exceptions, however, is in the precious metals area.
“The prices of both silver and gold are expected to continue to increase over the forecast period,” it found.
“Gold is likely to benefit from continued tension in the Middle East and North Korea, while silver is expected to continue to be supported by the strength in gold prices and by strong industrial demand.”
However, Access has left open the possibility that its forecasts may be on the low side.
It said continuing demand from China may keep a floor under prices.
“Commodity forecasters, including Access Economics, have called the price peak before now, and they’ve been consistently wrong,” it said.
“That is because Chinese demand continues to surprise on the upside, while new supply continues to surprise on the downside.”
© 2006 AAP
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