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To: Little Joe who wrote (10236)	4/20/1998 6:17:00 PM
From: goldsnow	Read Replies (1) \| Respond to of 116861

I think some people do not understand that with Copper Mines idle in kongo, Zambia (once biggest producers)and with China planning (pretty much has to) trillion $ on infrastructure in next three years, that if Japan were come-out of recession we would see a mother of all inflation pressures in commodities... Headline: Asian Metals - Surplus seen weighing on copper ====================================================================== By Lynne O'Donnell SHANGHAI, April 20 (Reuters) - Copper prices are facing a last chance to rally before a surplus hits the market and pushes prices down for the medium term, Asian traders said on Monday. Additional supply expected to come on stream in the second half of 1998 could see prices slip to $1,700 per tonne and below, traders and analysts in the region said. Chinese demand was seen as sluggish and was not expected to pick up enough to maintain price buoyancy, they said. Prices now targeting $1,900 and beyond were riding the back of strong peak-season demand in Europe and the United States, traders said. But the traditional slowdown that comes with the northern hemisphere's summer would coincide with increased supply from various producers, mostly in Chile, they said. The copper industry was seen producing a surplus of 360,000 tonnes in 1998, according to forecasts made early this month by Metal Bulletin Research. These factors, combined with any knock-on effects in the European and U.S. markets from Asia's financial problems could hit prices hard, they said. "The northern summer will be a harsh one because as demand picks up after the summer, there will be so much more copper supply than demand," an Australian broker said. "It is the last chance for copper for a couple of years. Once the extra supply comes on stream, I see prices at $1,700 and down," he said. Another industry analyst said prices around $1,650 per tonne were "looking interesting." Analysts polled by Reuters said Chinese imports so far this year had come on the back of arbitrages between the Shanghai and London metal exchanges. "Consumption is sluggish and it doesn't look like there is any real intention of topping up the strategic stockpile now," said a trader in China. Copper closed Friday's afternoon kerb on the London Metal Exchange at $1,854, having hit a high of $1,863 on rumours that Asarco's (NYSE:AR) Hayden smelter in the United States was facing unspecified problems. Asarco said there were no problems and they would restart the smelter on Sunday, one day later than planned, after a maintenance closure. The spike up from $1,825 to the day's highs above $1,860 was indicative of the nervousness of the market, traders said. They said that some chartists pointed to an inverted head-and-shoulders pattern that could see prices as high as $2,100 in the current rally, traders said. But traders and analysts were mostly bearish on the medium term. The current strength in the market had been driven by fund short-covering and heavy forward selling, they said. The forward activity indicated producers did not see these prices lasting. "The heavy forward selling we have seen is indicative of the lack of confidence," said another broker in the region. "The question is when will the rot set in?. The strength since mid-February has been based on that fickle thing called sentiment, driven by speculative activity, mostly from the funds," he said. "The funds were short at good levels and they saw their gains frittered away and covered themselves. Then we saw a big drop a couple of weeks ago when the market lost $100 in one day based mostly on fears about Japan," he said. The Asian downturn had seen copper diverted to the hotspots of Europe and the United States, traders said. "All it takes is for demand to level a little bit for cathode in Europe and America, as well as the rumblings out of Asia, for the copper price to move into the 1600s," said another Western broker in the region. "Sooner or later, the market will realise that supply will outstrip demand pretty soon," he said. -- Shanghai newsroom (8621) 6355-2001; fax 6355-5015 Copyright 1998, Reuters News Service

To: Little Joe who wrote (10236)	4/20/1998 8:28:00 PM
From: goldsnow	Respond to of 116861

Japan economy not on brink of recession--OECD 08:26 a.m. Apr 20, 1998 Eastern By Yoko Kobayashi TOKYO, April 20 (Reuters) - Japan's stalled economy is not on the brink of recession and may even start rolling again if the government takes comprehensive measures to pull the economy out of its rut, the OECD's chief economist said on Monday. ''It is not appropriate to say that Japan is on a brink of recession. It is on a brink of immediate transformation,'' Ignazio Visco told a news conference. The Paris-based Organisation for Economic Cooperation and Development (OECD) projected a 0.3 percent contraction in Japan's real gross domestic product in calendar 1998, but the downturn will not last as it expects positive growth in fiscal 1998/99 which began on April 1, Visco said. The government has announced the outline of a 16 trillion yen ($121 billion) economic stimulus package, including 10 trillion yen in new fiscal stimulus of which four trillion yen will be in income tax cuts over the next two years. Final details of the package are expected to be announced later this week. ''I am confident that the package is a good step in the right direction but it should be part of a comprehensive approach,'' Visco said, adding that the size of the package was ''proper'' but its effectiveness would depend on its composition. Visco said it was essential for Japan to take a long-term and comprehensive approach to its problems, addressing the issues of deregulation and reform of the services sector, especially banking. The view was echoed by Bank of Japan (BOJ) governor Masaru Hayami in his opening remarks at a quarterly meeting of central bank branch managers. ''Comprehensive economic measures being compiled by the government can be expected to have good effects in terms of an economic recovery,'' Hayami said. Hayami reiterated the BOJ's judgment that ''the economy remains stagnant with strong downward pressure on overall economic activity,'' adding that it will maintain an accommodative monetary policy stance to support the economy. Several BOJ branch managers also reported that their regions had slipped into recession, with all of the branch reports failing to mention any recovery in sight. Hayami said the BOJ would continue to closely monitor developments in the economy, in which output was falling and pressure on jobs and incomes was increasing against a backdrop of weak demand. Weak domestic demand was also behind a robust 57 percent jump in Japan's trade surplus in March to 1.25 trillion yen, as imports plunged while exports remained firm, data released by the finance ministry on Monday showed. Imports fell 11 percent in value as import prices showed signs of crumbling on competition from Asian countries with devalued currencies, the data showed. Exports rose one percent in value terms, the data showed. Underlining the fall in import prices was a two percent drop in Japan's domestic wholesale prices in the first 10 days of April compared with a year earlier, which heightened fears that deflation -- the phenomenon of falling prices that erodes corporate profitability -- was spreading in Japan. The three BOJ branches that discussed prices in their reports said they were flat or falling, but Eiichiro Kinoshita, manager of the BOJ's Osaka branch and a director of the central bank, said on Monday he thought it was too early to say Japan had fallen into a deflationary spiral. Visco said the implications of Japan's economic problems for the rest of the world were still small, as Japan was a relatively closed economy with its trade accounting for not more than 10 percent of world trade. Asia would feel the brunt of any effects of a downturn in Japan, but potential risks for the United States and Europe would be if there was a crisis in Japan's financial sector that had a contagious effect, he said. ($1 - 312 yen) ((Tokyo newsroom +81-3 3432-8022 tokyo.newsroom+reuters.com)) ^REUTERS@