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Gold/Mining/Energy : Copper - analysis

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To: 22jt who wrote (977)	10/28/2004 1:25:03 PM
From: Stephen O	Read Replies (1) of 2131

Barclays' Sternby Comments on China's Interest-Rate Increase 2004-10-28 11:08 (New York) By Simon Casey Oct. 28 (Bloomberg) -- Ingrid Sternby, a metals analyst at Barclays Capital in London, comments on China's decision to raise its benchmark lending rate for the first time since 1995. Sternby's comments came in an e-mailed note. On the impact on consumers and investors: ``The base metals had already been severely hit by the large technical correction two weeks ago, and with this announcement it will now take even longer for confidence to return to these markets. Consumers and investors that were looking to buy are now likely to remain on the sidelines in the short term. ``We believe China's interest-rate hike will have larger impact on market sentiment than on actual consumption.'' On the impact on Chinese metal consumption: ``The strong underlying trends in Chinese metal consumption are unlikely to be materially affected. Chinese metal consumers have recently undergone a period of de-stocking, downstream inventories are much leaner, and recent Chinese trade and production statistics for the base metals are generally price supportive.'' On copper demand: ``The impact on copper consumption from the interest-rate hike should be limited. Its largest end-use sector is power- generating equipment, a sector that needs ongoing heavy investment due to structural shortages.'' On aluminum demand: ``Aluminum demand is more exposed, with construction representing the largest share of its total in China, although this may be partially offset by the impacts on supply from efforts by the government to slow energy-intensive aluminum production.'' --Editor: Buckley

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