Deutche Bank downgrades commodities outlook

Citing low global growth expectations, Deutche Bank has lowered price targets for commodities. Deutche Bank expects global GDP growth to average 1.2% in 2009, and China’s economy to grow by 8.4% in 2009 and 7% in 2010, with negative implications for commodity prices. Deutche analysts expect that next year oil will fall to US$50 per barrel, aluminum to US81 per lb, copper to US$1.72 per lb., and nickel to US$4.35 per lb. They believe that lead will fall too, but they do not provide a price target. The analysts’ outlook on iron and coal is also negative, in view of their forecast that Chinese steel production will actually decline by 2% in 2009.

The analysts’ outlook on gold is more positive, but even here they forecast that the price should be around US$700 per oz., so they do not anticipate any gold rally. In Deutche Bank’s view, over the last few weeks the gold price has been artificially supported by money inflows to gold exchange traded funds (ETF’s).

Deutche Bank names three stocks as top picks with a “buy” rating: Vale (RIO-N), Cliffs Natural Resources (CLF-N) and Thompson Creek Metals (TCM-T, TC-N). (The buy rating for Thompson Creek was given before the recent crash in molybdenum prices, so it is outdated.)

Deutche analysts do not rate any other stock a “buy”. Coeur d’Alene Mines (CDM-T, CDE-N) is rated “sell”, while the rest of the mining stocks they cover are rated a “hold”: Freeport McMoRan Copper and Gold (FCX-N), Southern Copper (PCU-N), Alcoa (AA-N), Silver Standard (SSO-T), Grupo Mexico (GMEXICOB-M), and MMX (MMXM3 on the Sao Paolo stock exchange in Brazil.)