UBS Predicts Metal Prices to Drop This Quarter on Re-Stocking

BEIJING, July 8 -- Metals prices, which have risen 39 percent this year in London, will decline this quarter as re- stocking in China nears completion, according to UBS AG.

    "China's re-stock appears complete, whereas the Western World is unlikely to experience similarly strong restocking activity ahead of its seasonal summer slowdown," UBS analysts led by Sydney-based Glyn Lawcock said in a report dated yesterday. "The magnitude of the recent metal price recovery has in our view been exacerbated by the re-entry of commodity index, Chinese and speculative funds."

    The price of copper will drop 17 percent this quarter, nickel 15 percent and zinc 10 percent ahead of an "economic recovery," later this year, UBS said. "We now expect key commodity prices to enter the next cyclical upswing by late-2009 and to peak in 2011."

    (Source: Bloomberg)