LONDON, Dec 13 (Reuters) - Metals prices will diverge to follow their own fundamentals during 2011 as emerging market economies drive ahead and demand recovers in developed nations, pushing copper above $11,000, Goldman Sachs forecast on Monday.
"Metals with tighter cyclical fundamentals (copper, and zinc in the second half) will outperform those with readily available capacity (aluminium) or receding tightness (nickel)," Goldman Sachs said in a research note.
Robust demand from top consumers such as China and improved demand from developed nations against a mine supply shortfall were expected to drive up copper prices and exhaust almost all exchange stocks next year, Goldman Sachs said.
"We maintain our 12-mo ahead copper price forecast of $11,000/mt and believe that prices could spike substantially above these levels, most likely in late 2011," it said.
Exchange-based stocks in London and Shanghai sit at some 466,500 tonnes, down by around one third since early April. MCU-STOCKS CU-STX-SGH
This supply scarcity is expected to set a premium for near dated copper prices that triggers demand rationing, Goldman Sachs said.
Premiums for cash copper reached their highest in over two years above $63 a tonne in early December against the benchmark contract and remain at elevated levels. MCU0-3
Elsewhere, the market for refined zinc is expected to remain in surplus near term, but constrained concentrate and scrap supply against growing emerging market investment demand suggest inventories will top out next year.
Against this backdrop, rising demand for higher quality steel in growth economies -- zinc is used for galvanising steel -- is expected to improve zinc's fundamental picture in 2012.
Aluminium price risk is skewed to the downside for early 2011 due to high stocks and excess capacity although prospects improve for 2012, according to the Goldman Sachs note.
"Higher trend aluminum demand and rising energy cost support could deliver better price performance heading into 2012," it said.
Likewise, prospects for nickel see "significant" downside risks in the year ahead as returning Vale VALE5.SA supply, new project commissioning and ramp up, and slowing emerging market consumption growth into mid-2011 push the market into a "sizable surplus," it said.
A year long strike at Vale Inco's Sudbury and Port Colborne nickel operations ended in July. <ID:nN08128896>
Vale's operations in Sudbury, together with its sister operations in Voisey's Bay, account for roughly 10 percent of global nickel supply.
"However, we believe that the outlook for dramatically rising consumption demand from emerging markets will keep long-dated nickel prices well supported," the note said.
3-MTH 6-MTH 12-MTH *COPPER CMCU3 $8,800 $8,800 $11,000 ALUMINIUM CMAL3 $2,125 $2,200 $2,200 NICKEL CMNI3 $19,500 $19,500 $19,500 ZINC CMZN3 $2,300 $2,400 $3,100 *Based on LME three-moth prices ** Prices per tonne of metal (Reporting by Melanie Burton; editing by James Jukwey)