The Hindu Business Line : `Indications of rebound in metals market'

Time for rebound
Copper seen having strong upside potential
Nickel higher for all remaining quarters of 2007
Tin likely to draw support from supply side problems

Mumbai March 28 Is the base metals market set for a rebound? There are indications that the market has commenced its northward journey.

Copper

Copper, for instance, is seen having a strong upside potential and experts are revising their price forecast.

Latest CFTC data for the week ended March 20 shows that tactical investors continued to scale back their net short exposure to the Comex copper market.

The net short position in Comex copper was reduced on the back of a combination of the establishment of fresh long positions and modest short covering activity.

Speculative sentiment towards the Comex copper market has been bearish for some time now, keeping it consistently in the negative territory since April 2006.

Upward revision

However, the net short position is now at its lowest level since early November 2006. Both demand side and supply side factors have prompted an upward revision of base metals price forecasts.

Barclays Capital has revised its quarterly 2007 base metals price forecasts (copper, lead and nickel), with the exception of zinc.

In the light of strong rebound in China's refined copper imports and the downtrend in LME refined copper inventories in contrast to the trend of inflows witnessed earlier this year, second-quarter copper prices are marked up.

Lead outlook

Similarly, second-quarter lead forecasts have been revised up on the back of supply side disruptions, strong demand and declining inventories.

Nickel prices are forecast higher for all three remaining quarters of 2007.

While prices are anticipated to correct from their current record levels, delays and disruptions in bringing new supplies to the market and the critically low level of LME nickel stocks continue to underpin prices.

Support for tin

Tin prices are likely to draw support during 2007 from the ongoing supply side problems from Indonesia's Bangka island in an environment of positive demand and low inventories, Barclays said. In contrast, zinc price forecasts have been scaled back in the wake of surging zinc exports from China, coupled with LME zinc stock inflows that have served to depress zinc prices.

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