High Hopes For Metals – US-FOREX.US
While recent pullbacks across raw materials may stoke fears of the bubble bursting, commodities bulls are undeterred. Inventories, after all, are extremely low and will have to be replenished once demand improves. Until then, volatility is just part of the game.Fears that China’s inventory build is over and that the economic recovery won’t be as robust may pressure prices of industrial metals in the near-term, but the sector’s long-term growth prospects remain promising. Thus far, China has been a main driver behind metals price growth but, according to Barclays Capital analyst Kevin Norrish, “the potential still exists for a significant boost to global metals consumption over the coming months as the industrialized work manufacturing sector recovers from double-digit declines registered in the first half of 2009.”The firm hiked its price forecasts for the metals on Wednesday, citing expectations for demand among developed countries that will be swifter than the market is anticipating. “We expect metal inventories to be rundown through the second half of 2009 with the recovery in OECD demand likely to be sharp and strong,” said analyst Gayle Berry. On Wednesday, the Materials SPDR
exchange-traded fund closed ahead by 35 cents, or 1.2%, at 29.44; and the SPDR S&P Metals and Mining
ETF closed up by 22 cents, or 0.6%, at 40.17. Year-to-date, the funds have gained nearly 30% and 45%, respectively.
