Copper prices began the year buoyed by bullish hopes that supply and demand would be well aligned this year amid an imminent global economic recovery, says David Rinehimer, Salomon Smith Barney's precious-metals analyst. Although prices have rallied 10 percent this year to a recent 73 cents per pound, supplies continue to accumulate faster than demand, which simply hasn't recovered despite news that U.S. industrial production growth is quickening. Stockpiles have more than doubled in the past year.Result: The near-term outlook remains grim. "We haven't seen the lows yet," says Rinehimer. "The market is vulnerable to break under 70 cents per pound." John Tumazos, a Prudential Securities metals analyst, agrees; "I think the copper market is ugly this year." Yet, looking to year end, copper's prospects looks much healthier. In fact, "it has the best outlook of any commodity," says Tumazos. Scrap-metals dealers Jack Epstein, the president of Timpson Trading, is seeing signs of market tightening. Epstein says he is beginning to see that "scrap prices are tightening in all grades of copper," driven partly by the strength in the housing-renovation market.
NSTL
