MARKET TALK: Base Metals Inventories To Rise In 07, 08

Growing supplies will lift inventories in all base metals in '07 and '08 but stocks are still likely to be below historical averages by the end of this period, says JP Morgan. "While such an inventory trend would ordinarily allow for a retracement from base metal cycle highs of about 30%, fund activity took prices beyond levels that we think were justified by recent inventory low points," JP Morgan notes. Fund redemptions may cause prices to "overshoot levels they would ordinarily fall to under the above inventory conditions."