London, 12 October 2010

Standard Bank: "The title of our LME Week special report last year was “A game of two halves.” Usually an overused cliché by football pundits, the title was a reference to the 2010 FIFA World Cup Finals which were held in South Africa, but also highlighted what we saw as an uneasy and potentially fractious transition from recession to recovery over the course of 2010.

"As it turned out, much of the year has been characterised by serious concerns over sovereign debt issues across Europe, the potential fallout from monetary tightening, efforts to control a developing property market bubble in China, and the threat of a double dip recession in the US.

"These underlying issues have left the base metals effectively treading water for large periods in 2010, waiting for clarity and confidence in the economic outlook to return. This is in stark contrast to 2009, when strong and virtually uninterrupted uptrends were the order of the day across the board.

"As we head into the final quarter of 2010, conditions are in many ways reminiscent of 2009. Risks exist, but the base metals continue to power higher, alongside other commodity sectors and equity markets, fuelled by an abundance of liquidity and a weakening dollar.

"Now, however, the fundamentals of most base metals markets are significantly stronger than they were at any point last year, with copper and tin looking particularly tight. These markets have already returned to supply deficits, as has nickel, and lead will join them in deficit in 2011. So, with tight fundamentals, a global economy putting its latest wobble behind it and another round of quantitative easing expected to be on the way, we think it is now a case of “Onwards and Upwards” for the base metals complex."

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