UBS improved forecasts for base metals

UBS raised its forecasts for base metals, noting improved macroeconomics, a tightening physical market and steady demand. The bank sees the greatest prospects for copper and aluminum, while estimates for nickel are lowered, and caution remains for zinc.

• Copper: the forecast for 2025-2026 has been raised by ~3% to $4.37/lb and $4.80/lb. The deficit may increase by 2026-27 due to limited production growth and high structural demand.

• Aluminum: estimates increased by 5% for 2025-26, the main factor is limited supply, especially in China. Norsk Hydro is among the favorites.

• Nickel: Forecasts reduced by ~5% to $7.25/lb (2026) and $7.50/lb (2027) due to oversupply risks.

• Zinc: the short-term forecast has been raised by 5%, but an increase in supply may weaken the market.

• Iron ore: prices will remain around $100/ton in the coming months, then drop to $85-90/ton by 2027.

• UBS also expects a short-term increase in prices for thermal coal, despite the pressure in the medium term.

• The bank maintains a positive outlook on gold, but after a strong rally, the risk/return ratio looks less attractive.

The revised forecasts may increase the sector's EBITDA by 5-15% and earnings per share by 5-20%. Among the favorites: Anglo American, Teck, Antofagasta and Glencore.