It is time to look into the crystal ball once again this week to check on commodity price forecasts for the balance of 2013. In fact, it is not just one look into the crystal ball, but 22 different gazes – one for each of the different mineral commodities.

That said, the annual average prices for this year come out pretty flat. Specifically, the average price of a basket of 22 commodity price forecasts lies at the same level for the 2013 calendar year as did the starting benchmark, that being the average 2012Q4 prices across the basket of commodities.

In detail, 13 commodity prices will rise over 2013, one will remain flat and only eight will see declines. Two commodities stand out with expectations of substantial prices increases, but the overall basket is balanced by two commodities where significant price falls are forecast.

Coking coal and tin sit at the top of the 2013 Heat Chart, with ‘Hot’ price increases for 2013 driven by continued market tightness, which is expected to continue into the medium term.

In contrast, the 40% tax on Chinese metallurgical coke exports, effective from January, has dramatically downgraded future price expectations there; met coke price expectations languish in the Freezing zone. Alongside met coke, a very loose market balance for merchant ammonia should also lead to a softening of prices.

Here are the details for 2013:

Hot (More than 15% price rise) – coking coal, tin;

Warm (5% to 15% rise) – alumina, manganese, aluminium, iron ore, cobalt, palladium, sulphuric acid;

Mild (Flat to 5% price rise) – nickel, zinc, platinum, copper, lead;

Cool (Flat to -5% fall in price) – gold, silver phosphate (DAP);

Cold (-5% to -5% price fall) – urea, sulphur, potash;

Freezing (More than 15% price fall) – ammonia, metallurgical coke

Uranium is omitted from the 2013 compilation – with further analysis underway to update the view there – but general expectations are for a flat 2013 – rising in the medium to longer term, but that’s another story.

So there you have it. Positive territory for coking coal and iron ore prices means that the Minerals Resource Rent Tax in Australia may yet claw back some of the lost expectations regarding government revenues as the year progresses. Stable prices for other major mineral markets, including copper, should keep those minerals out of the super-profits tax debate in the lead-up to the September election.

As for the tax outlook thereafter, that depends just as much on how Australia completes the ‘how to vote’ card as it does on the mineral markets themselves. As for the longer-term outlook for mineral prices, more on that next week!

Good hunting.

Allan Trench is a professor at Curtin Graduate School of Business and research professor (value & risk) at the Centre for Exploration Targeting, University of Western Australia. He is a non-executive director of several resource sector companies and the Perth representative for CRU Strategies, a division of independent metals and mining advisory CRU Group (allan.trench@crugroup.com).

* With thanks to Peter Ghilchik, multi-commodity market analysis manager at CRU Group peter.ghilchik@crugroup.com