According to Rudolf Wolff's report, The Outlook for Metals in 1999, nickel price during the first three months of 1999 is forecast to average $4,100 per tonne, around 17 per cent lower, compared with $4,934 per tonne in the first nine month of 1998 and $7,032 per tonne in 1997. The price swing is 41.70 percent lower than the average price that prevailed in 1997.

On the other hand, tin prices are predicted to be in the region of around $5,000 per tonne, down 7.06 per cent than the average $5,380 per tonne that prevailed in the first nine months of 1998, and some 12 per cent lower than the average prices of 1997.

This is despite the fact that net addition of nickel stocks during 1999 (over 1998 stocks) is just around 1,000tonnes, while stocks of tin is expected to decline by over 852,000 tonnes over 1998 stocks (see table)The projected decline in prices of five other metals traded on the LME are as follows: Lead, 15.75 per cent; copper, 10.75, zinc, 10.36 and aluminium 9.38 per cent. Price swings of aluminium alloy were not available.

Outlook and technical analysis

Copper: Global copper stocks are expected to rise. However, with increase in finance and warehouse deals, these are not expected to be readily available to the market. This is likely to exacerbate any shortcovering rallies. Copper's long downward trend remains intact, despite having lost some momentum in the past months. The recent downward break to a new year low of $1,576 per tonne, coupled with weakening technical indicators suggests continued weakness. The break has yet to fully confirm the symmetrical triangle continuation pattern. A close is still required below the support line at $1,599. Such a confirmation would then target $1,400 with supportfirst placed at each $50 down to $1,400.

Aluminium: Global inventories are predicted to rise, and growth rates in US and Europe are expected to slowdown in 1999, tempered by the decline in international trade. The metal traded at a new low of $1,280 in early July, has been looking to form a base between $1,280 and $1,450. The technical indicators are drifting sideways in line with this range trading, as the next confirmed movement is anticipated. The downtrend, since the 1995 peak, still intact. Wolff flavour is continuation. To reverse this trend the resistance at $1,550 would need to be overcome. On the downside, below $1,280 the next god support is placed at $1,230/50 and $1,160.

Zinc: LME stocks have declined steadily after topping peak levels of 501,900 tonnes in late 1997. Consumption is expected to rise by only 1.5 per cent in 1999 after contracting this year. The threat of additional exports from China coupled with the fear of a global recession will have a depressing influences onprices. The technical indicators have confirmed the new lows posted by zinc this month, suggest downward trend is intact. Despite the underlying entering oversold territory, there remains room for further slides. Support has shown at $940. This is expected to come under further selling pressure, with a break signaling support at $920 with $870 below there. Initial resistance is seen at $1,000 and then at $1,040/60 with $1,100 and $1,150/85 as the next key resistance levels.

Lead: Total visible commercial stocks are at historic lows. A rising western world supply surplus is predicted for 1998 and 1999, which is expected to be reflecting in rising inventories. Support at $500 is holding firm, however, with successive lower highs, we expect this level to be broken. This would suggest a movement to $440 and a potentially new trading range between $400 and $500. The technical indicators are on the lower trend, in line with the underlying's movements. Resistance seen at $550/70 and then $600/30, which isexpected to prove tough to overcome.

Nickel: The savage decline in prices has prompted producers to curtail their output. Stocks have been declining throughout 1998 on the LME. With stainless steel in oversupply and the likelihood of producers cutting down production, nickel demand is expected to fall by 1.5 per cent in 1999.

Psychological resistance at $4,000 has been breached and technical indicators are trending lower. This suggests no respite for nickel, which is expected to slip lower to test $3,500, below where next strong/psychological resistance is placed at $3,000. There are signs that the trend may be losing its downward momentum, with the technical indicators failing to confirm the new market low. To reverse the downtrend, $5,800 would need to be overcome. A confirmed break above $4,500/800 would be seen as an initial indication of an impending change of direction.

Tin: Consumption is expected to rise in 1999 by 2 per cent after no growth this year. Stocks have beensignificantly drawn upon, particularly because of the strength in US consumption, exaggerated by the production difficulties mentioned above and the resultant low availability of tin inventory. With production forecast to recover and demand likely to remain weak in 1999, further increases in the LME tin stocks are expected.

Technical analysis say the collapse of tin's upward trend was confirmed by the technical indicators. The downward movement is looking overdone, as a corrective bounce back up towards $5,700 is sought. The technical indicators have begun to cross off their lows. Towards $5,700 good resistance is expected to be uncovered, above where $6,000 is anticipated to provide a psychological barrier. Support is seen between $5000/100 and then $4350/500.