28 March 2006

Metals making for sweet spot 'supercycle,' Citi says - MarketWatch

Metals making for sweet spot 'supercycle,' Citi says - MarketWatch: "NEW YORK (MarketWatch) -- Citigroup, forecasting tighter global supplies of copper and nickel, reversed its bearish stance on various metals Monday, saying those commodities, and more modestly aluminum and gold, are likely to make the most of a 'supercycle' sweet spot.
Metals have shrugged off interest-rate jitters, intermittent weakness in oil and gas prices, several rounds of profit-taking and seasonal demand slowdowns, among other events, according to Citigroup.
Analyst John Hill wrote that a 'drumbeat of operating outages/shortfalls' could introduce an extended period prices at more than $2.50 a pound for copper, more than $7 a pound for nickel and more than $1.25 a pound for aluminum. 'As a consequence, we expect a wave of upward earnings estimates revisions, both short- and long-term, and a very favorable environment for the equities.
'This represents a significant change of opinion on copper and nickel, where the Citigroup global team is abandoning a longstanding bearish stance due to the prospects for synchronous economic growth, structurally tight inventories, sluggish new capacity additions, and recurring operating outages/shortfalls,' Hill wrote. "

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