The Outlook For Metals

Sydney, Apr 13, 2007 (ACN Newswire) - WhatBHP Billiton said in its interim profit and outlook statementin February is still the best explanation about why metals prices are currently surging.

"Market indicators do not point to large scale supply surpluses emerging in 2007, although demand growth can be expected to vary regionally in line with varying economic activity.

"China is set to continue as the main driver of demand, but more mature markets may also lend support, especially Europe and Japan. "Despite the expansion of China's domestic production base, imports of commodities will continue to play a crucial role in supporting the country's industrialisation."

Judging by the commentaries in market reports in the past month, that's spot on.And this is what BHP Billiton had to say about why 2006 was such a good year.

"In 2006 real annual average prices for copper, zinc, iron ore, coking coal, thermal coal, crude oil, natural gas and uranium reached their highest levels since the 1970s.

"Aluminium, nickel and lead also passed 15 to 20 year annual average peaks.

"Strong global demand growth coupled with low inventories were supportive of high prices, although investment interest also exerted an influence.

"World consumption of the major non-ferrous metals rose by five to ten per cent in 2006 while use of finished steel also grew strongly. Supply also accelerated, but notwithstanding this, most commodities remained in deficit.

"Combined LME warehouse inventories of primary metal continue to remain at historically low levels. Overall stock-to-consumption ratios are at their lowest levels in more than 30 years, and there may be limits to further consumer de-stocking in many sectors."Much of that commentary could be applied to 2007 about the strength in metals. Lead, tin, nickel have all hit record highs, copper is very strong, zinc a bit weaker than last year while aluminium is doing very well.

World metal prices have shaken off the dip at the start of the year, and are now at or approaching record levels.So what has changed from this summation of 2006 by BHP Billiton or its views about 2007 (and probably 2008 as well)?

Not much at all; the same factors are at workbut what is concerning a growing number of analysts is the speed of the rebound in copper, the continuing ultra thin physical nickel market and the absurdly high world prices, and the way the likes of tin, lead and sometimes zinc are being driven higher, much more quickly than a year ago.There's a feeling in the market comments that this time around there's more of a speculative feel to the surge in metal prices.Oil is not rising like it did last year for example, even with rising tensions in Iran nor has gold gone for a long run up past $US700 an ounce, despite a couple of feeble attempts so far this year.

You can blame hedge funds and other financial speculators all you like but the principal driving factor remains, as BHP said, China and then the rest of Asia, Japan and Europe.

BHP, remember, also downplayed the continued influence of the US in the same commentary compared to the emerging influence of China and India, a point that the International Monetary Fund woke up to in its 2007 world outlook release yesterday.

While oil, zinc, copper, nickel, gold and other precious metals led the boom last year, this year it's copper driving the rebound.

The past two weeks before and after Easter have seen some very sharp gains in the price of copper in London and New York.

Copper hit a fresh seven-month high on Wednesday, with the three month price rising 2.5 per cent on the day to $US 7,945 a tonne on the LME, and 5.65USc/lb in New York to 358.25 USc/lb. That was after a near six per cent rise in price on Tuesday.Copper prices were steady in London but eased Thursday to 350.20 USc/lb in newYork on profit taking.

Driving the situation isChina and the fallout from the news that March saw the biggest ever figure for copper imports into the country of a huge 307,740 tonnes. That was 61 per cent up on a year ago when the previous boom in prices was well underway

Copper stockpiles monitored by London, New York and Shanghai exchanges are around five per cent down on the peak of 284,808 tons in mid March.

Chinese stocks are rising simply because of the imports and not even a sharp fall in China's March trade surplus, revealed earlier this week, could shake the confidence of copper traders, and others in the metal markets.

....................

Meanwhile the leading broking firm, UBS said in a note to its warrants clients this week that it had "raised our 07 nickel price forecast to $17.44/lb from $14.50 previously", and are "forecasting US$2.99/lb for copper and US$700/oz for gold in 2007". Both unchanged.

UBS wasn't so confident about zinc's outlook seeing softness because of "moderating market balances".

Other broking firms are telling clients to watch stocks like Newcrest which are more sensitive to the Aussie dollar. Looking and finding the sensitivities of a range of companies to the currency changes will be a major part of many investors' work this year.

Of course, the likes of the banks, Telstra, and retailers are going to be well placed because of the stronger dollar, if it persists.

But the market is still being driven by the resources boom and it's the events in metal markets that remain of interest.

Copper, as we have noted, is the leader at the moment and the industry seems pretty confident this will continue for some time.

An industry conference in Chile late last month heard that the market was expected to remain tight for the remainder of 2007, thanks to China and the continuing constraints on expanded supplies.

Prices were forecast to average more than $US3/lb this year (they are comfortably above that at the moment). That compares to the record of $US4.16/lb 11 months ago last May.

AIR publishes a weekly magazine. Subscriptions are free at http://www.aireview.com.au


About ustralasian Investment Review

Australasian Investment Review (AIR) is a free aily news service with a weekly nline magazine overing global financial markets with a focus on Australia, New Zealand and Asia.

Each morning (Sydney time) AIR's team of experienced journalists present you with a concise digest of expert opinions and analysis n trends and backgrounds that matter in these markets. AIR is available free of charge.




Best regards,
＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊＊
DONGGUAN JIEFU FLAME-RETARDED MATERIALS CO.,LTD
Sam Xu 许彪
Sales Engineer 　
Tel: 86-755-83474911
Fax: 86-755-83474980
Mobile:13929211059

E-mail: xubiao_1996@hotmail.com samjiefu@gmail.com
Add: jiefu industrial park shuiping industrail district dalang town dongguan GD,P.R.C
WebSite: http://www.jiefu.com
blog:http://jiefuantimonytrioxide.blogspot.com

Export: antimony ingots,ATO,dust free ATO,ATO masterbatches EVA80.EAV90;PE80,PE90,PVC85,PP80,ETC, other flame retardant masterbatches,
¤ ╭⌒╮ ╭⌒⌒╮
╱-◥██◣ ╭ ╭ 工作顺利！天天开心！ @-@
︱田︱田田| ╰----------------------
╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬╬