Morgan Stanley revises 2026 price forecast for base metals

Dec 16 (Reuters) - Morgan Stanley revised its 2026 price forecast for aluminium, zinc, nickel, and lead on Tuesday, citing a strong outlook for metals driven by anticipated rate cuts, potential dollar weakness, and growing investor demand for real assets.

Morgan Stanley expects aluminum prices to reach $3,250 per ton by the second quarter of 2026 as demand outpaces supply, while the copper/aluminium ratio is at the top of its recent range, suggesting room for some catch-up, it said in a note.

Meanwhile, zinc prices are forecast to fall slightly in 2026 to $2,900/ton. "With LME inventories recovering as China exports more zinc, and mine supply growth to continue in 2026, we see modest downside to zinc prices in 2026," the bank said.

Morgan Stanley expects nickel prices to retreat towards $15,500/ton as demand grows at a similar rate to supply. The bank said that Indonesian policy changes pose downside risks to supply, while ongoing market share losses in EV batteries curb demand, leaving the market in surplus through 2026.

For lead, Morgan Stanley forecasts an average price of just over $2,000/ton as elevated LME inventories indicate a surplus.

The bank also expects copper to experience a 260,000 ton deficit for 2025 and a 600,000 ton deficit for 2026.

It said copper inventories outside the United States were low and could shrink if the U.S. continues to import the metal as increased data centre demand exceeds supply growth.