MARKET TALK: Base Metals Strong In 2Q, Upside Likely - BarCap

Base metal market in busy 2Q demand period and low inventory levels, supply problems, strong demand from China make further price gains likely, says Barclays Capital. While is potential for lower copper prices on technical basis in short term, advises dip buying for challenge of record 2006 peak of $8,825/ton. Adds lead fundamentals "arguably the strongest of any base metal at present, with significant production losses hampering supply growth"; zinc performing more strongly on evidence of slowing Chinese exports, falling LME stocks. Aluminium market fundamentals suggest range-trading to continue but large number of call options for June suggest upside risk. Nickel vulnerable to stainless steel destocking but retains potential for big moves in either direction.