Full steam ahead for commodities: Merrill
SUB-PRIME contagion, market volatility and concerns for a looming recession in the US won’t derail the commodity supercycle, Merrill Lynch said in a report yesterday, upping its price forecast for base metals, coal and iron ore across the board.
Annual contract prices for iron ore will likely rise some 40 per cent year-on-year in a market that will remain in a deficit for another four years, alongside strong expected price rises for thermal and coking coal, it said…. “For the mining sector, US demand is becoming less relevant, as China consumes two to four times more metal and comprises close to 75-100 per cent of demand growth for many commodities,” Merrill said. “While we don’t believe the Fed will allow the US to go into a recession, if it did, we believe that this would only impact Chinese demand at the margin.”
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