LONDON, Dec 12 (Reuters) - U.S. bank Goldman Sachssaid on Friday it has cut its forecasts for base metals because of the sharp deterioration in global industrial output and the worsening demand outlook in 2009.
The three-month forecast for aluminiumtraded on the London Metal Exchange was cut to $1,300 a tonne from $2,020 previously, copper to $2,700 from $3,835, nickel to $8,000 from $11,095 and zinc to $1,080 from $1,310, it said in a note.
"Although the rebalancing process is already underway with deep cuts in mine and smelter production...we expect substantial surpluses across most metals to continue to pressure prices lower from current levels in the short-to-medium term," it said.
Many producers have been forced to cut output and postpone future projects in response to the slump in demand and as the drop in metal prices has put pressure on marginal costs.
The bank said it believes the fundamentals are strongest for zinc, which is used to galvanise steel, and the weakest for aluminium.
"Historically, zinc demand has tended to fair better during economic downturns," it said.
It expects demand for aluminium in 2009 to fall 1.7 percent year on year.
Aluminium is used transportation and construction, two sectors heavily hit by the global economic slowdown.
Goldman slashed its 2009 average price forecasts for aluminum, copper, nickel and zinc to $1,410 a tonne, $2,950, $8,980 and $1,150, from $2,310, $5,230, $12,735 and $1,475 respectively.
"We anticipate that declining borrowing costs, tightening supplies and some stabilization in demand will lead to sequential improvement in prices by late in the year, but anticipate that large surpluses and high inventories will largely persist," it said.
Following is a table of new and old three, six and twelve month price forecasts. All prices are dollars per tonne.
3 months 6 months 12 months
Old New Old New Old New LME Aluminum 2020 1300 2200 1380 2800 1500 LME Copper 3835 2700 4875 2850 7500 3200 LME Nickel 11095 8000 12125 8750 15500 9700 LME Zinc 1310 1080 1415 1140 1750 1235
(Reporting by Pratima Desai and Julie Crust; editing by Peter Blackburn)
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