Article from mining newsThursday, March 24, 2005OVERNIGHT falls...

Article from mining news

Thursday, March 24, 2005

OVERNIGHT falls in world metal prices have not dimmed long-term optimism for demand with two leading organisations tipping continued strength in prices.

Standard & Poors, a leading ratings agency, raised its base case forecast for the price of nickel to an average of $US13,200 per tonne in 2005.

Platts newsagency said S&P's analysis of the nickel market found that "demand continues to grow at a fairly stable pace, but the lack of new supply will result in a continued deficit in 2005."

In a separate report, Barclays Capital has raised its base metal price forecasts from the next three years.

Dow Jones said that Barclays expected prices to reach a peak later this year and then ease slightly.

"Higher prices will be driven by concerns over supply shortages with critically low inventories being brought to market attention by robust global growth," Barclays said.

"As a result, we see a further 15% upside potential from current prices to our spot targets."

Pick of the base metals complex, according to Barclays, is zinc, followed by copper and nickel. It expects the London Metal Exchange zinc price to average $US1500/t in the second quarter of 2005, $US1490/t in the third quarter and $US1480/t in the fourth quarter.

Looking further ahead, zinc is tipped to average $US1470/t in 2006 and $US1350/t in 2007.

Nickel is tipped to average $US15,000/t in the final quarter of this year, dropping to $US14,000/t in 2006 and $US12,500/t in 2007.