BNP Paribas/Fortis: Commodity Outlook 2010

Introduction
China’s rapacious appetite for base metals has shaped this market throughout 2009; without China, and the promise of its long-term growth, prices would be languishing at almost half their current level. Now that China has reiterated it will maintain a relatively loose monetary policy in 2010, and forecasts for China’s GDP growth next year are already exceeding 9%, the year ahead is unlikely to see much price weakness for base metals – if anything, the reverse. We also expect speculative investment levels to rise, given what is now almost certain to be an effectively zero interest-rate environment during the whole of 2010. That spells persistent weakness for the US dollar and, with economic recovery likely across almost all the OECD countries, 2010 is shaping up to see
base metals prices shift beyond their 2009 highs and perhaps challenge levels last seen in H1 2008. The only real negatives are the massive inventories and the threat of over-supply, as miners and smelters ramp-up by too much, and too soon.

http://www.ziddu.com/download/7871686/BNPCommodityDec2009.pdf.html