"Do you think if we drink enough wine, we'll turn bullish for 1999 by the end of lunch?" one trader said.

"There's not enough wine in London," another replied.

The sentiment was shared by most of the traders and executives who had converged on London for the annual London Metal Exchange (LME) week of international industry gatherings.

Most arrived last week feeling pessimistic about the prospects for prices on the LME, the world's premier metals market, against a backdrop of worsening economic conditions worldwide. And after a week of meetings, receptions, luncheons, parties and dinners, most went home feeling no better than when they got here.

Copper in heavy surplus: Nowhere was the negative sentiment more acute than in the copper market, where analysts projected a market surplus ranging from as little as 200,000 tonnes to as much asone million tonnes, with price averages ranging from 69 cents to 74 cents a lb.

"A sustainable change in market direction...will only arise once the macro-economic outlook improves," Martin Squires, an analyst with brokerage house Rudolf Wolff, said in a report.

As much as 20 per cent of the world's mining capacity was operating at costs below the current price of copper, he said. Unless 200,000 to 300,000 tonnes of production were immediately mothballed, a shift in the market was unlikely.

Phelps Dodge Corp, the largest US copper producer and one of those whose cash costs are below the current market at 72 cents a lb, announced last week that it was slashing its output by more than 90,000 tonnes.

The announcement barely registered on the market.

Phelps Dodge chairman and chief executive Douglas Yearley told Reuters last week that the Asian market continued to look poor and that the US economy was likely to contract next year. He predicted a global surplus of 200,000 tonnes unless producers madematerial cutbacks.

Stubborn bulls remain: The market was not completely devoid of bulls. Asarco Inc's chairman and chief executive officer, Richard Osborne, ever the optimist, held fast to his projection of a 68,000 tonne supply deficit next year.

"Our business in the US has been excellent," he said."We've seen a good snap back after the summer slowdown...I don't see any case for a recession in the US next year."

He added: "The decline in Asia is no longer precipitous. We're beginning to see some modest signs of recovery."

Juan Herrera, senior sales executive from Chile's state-owned Codelco, the world's largest copper producer, said the supply surplus was being over-estimated.

"We have this habit of anticipating surpluses, which are always larger than what really happens," he said. "Maybe we tend to exaggerate...the production side and under-estimate the consumption side."

He predicted stable consumption in Europe and the United States in 1999, although Asian demand would still belacklustre.

Phelps Dodge's Yearley summed up his view of Asia as "prepare for the worst and hope for the best."

This view was echoed by Falconbridge Ltd chief executive Oyvind Hushovd and Noranda Inc chief operating officer David Goldman, both of whom said metals prices were due for a recovery if Japan could sort out its banking woes and the rest of Asia could stay afloat.

"Zinc, in particular, has the best fundamentals of the bunch," said Noranda's Goldman.

Indeed, zinc is the only metal forecast to see a balanced market or a possible deficit in 1999.

Kevin Norrish, an analyst with investment banker Barclays Capital, forecast a zinc price of 51 cents a lb, compared with a current three month price of 43 cents.

"We expect the zinc market to stay in balance for the remainder of this year, and if general market sentiment improves prices could rise further during the first half of next year," he said. He added, however, that the market was expected to return to surplus by the second quarter of nextyear.

Other metals looking weak: Analysts forecast an aluminium surplus next year of 475,000 to 800,000 tonnes, with a price prediction of 57-60 cents a lb, compared with a current price at 59 cents.

"Healthy consumption levels in the US and Europe have offset demand weakness in Asia, but we expect to see some slowdown in US consumption," said Robin Bhar, an analyst with brokers Brandeis Ltd.

The nickel market is viewed as having the weakest overall supply-demand picture, with most analysts looking for production cuts. But most believe the price is due for a rally with the market hovering near its lowest for 11-and-a-half years.

Supply surplus estimates range from 8,000 to 20,000 tonnes, with price forecasts between $2.24 and $2.45 a lb. The current price is around $1.83 a lb.