Morgan Stanley Research (MSR) sees global expansion continuing through 2019, but risks from trade barriers and China policy tightening are building. The research group has turned more constructive on met coal, copper and iron ore. They believe supply disruptions underpin the outlook for incrementally stronger prices. The MSR metals team raised its 2018, 2019 and 2020 copper price forecasts by 1% to $3.11/lb, 5% to $3.14/lb, and 1% to $3.01/lb, respectively. The team expects the market to remain balanced through the rest of 2018, but potential strike action presents upside risk. They are expecting a supply-driven deficit to emerge in 2019 as Grasberg enters a “transition year,” but brownfield projects and a number of greenfield mines will rebalance the market into 2020 by adding 1.4 million metric tons (mt) of supply by 2022. The MSR team’s long-term nominal price is $3.11/lb, unchanged from the last update.
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