Mitsui Bussan Commodities Ltd. raised its 2006 copper price forecast during a half-year review, citing commodity investment trends since the start of the year, strong demand and supply side problems for some LME traded metals.

Mitsui's London Metal Exchange cash copper price forecast rose to $6,530 a metric ton, nearly double from a forecast of $3,538/ton made at the end of 2005.

For aluminium, analyst Michael Cuoco forecast a 250,000-ton deficit for 2006 and a marginal surplus for 2007.

Alumina prices "appear to have peaked" and are headed lower because of planned capacity increases, notably in China.

Prices are forecast at $2,546/ton basis LME cash for 2006 followed by a $2,325 average for 2007. This compares with a forecast of $2,162.50/ton end-2005.

The zinc market will show a deficit of 130,000 tons during 2006, extending into 2007 before a return to surplus in 2008, Mitsui said.

A rise in mine production in Myanmar, Laos, Iran and Turkey has contributed to decrease an earlier deficit forecast of 336,000 tons.

"Due to the lessening deficit over the next 18 months, we expect prices to soften from the current $3,000 mark to average $2,979 for 2006 and $2,706 in 2007," Cuoco said.

LME cash price forecasts in dollars/ton:

2006 – Q3 – 2007

Copper 6,530 7,100 6,244

Aluminium 2,546 2,600 2,325

Zinc 2,979 3,200 2,706

Lead 1,037 930 841

Nickel 18,070 20,000 16,800