"Just as the downturn in demand was amplified by heavy de-stocking, the strength of the recovery may surprise due to the impact of restocking," he said. Despite a further year-on-year fall expected in 1999 metals consumption in Japan, the biggest Asian consumer of most base metals, there would be a small bounce-back in growth rates for overall Asian metals demand, he said. Lennon was looking for growth of 2.5 per cent in zinc and four per cent in aluminium this year, with the pick-up accelerating to 5-6 per cent in the year 2000, which should bring Asian demand back above pre-crisis levels.

"China remains a major area of uncertainty in the Asian recovery...the major restructuring of the country'seconomy currently under way could potentially have large negative impacts on the metals' supply and demand," he further added.

"Protectionism is starting to rear its ugly head in the steel industry and this could cut short recovery in this sector, having an impact on zinc and nickel use," he said. By 1997, he said, the Asian region was the largest consuming region in the world for virtually all the main metals with between 29 per cent and 41 per cent of total world demand.

He estimated the Asian economic and financial crisis, which began in mid-1997, slashed 1998 Asian demand for aluminium by more than seven per cent, nickel demand by six per cent, copper demand by 5.4 per cent and zinc demand by two per cent.

"Japan and East Asia, including Taiwan, (South) Korea and the other ASEAN countries, were the hardest hit areas in terms of primary metals' demand in 1998," he said. "China, India and the Middle East countries emerged relatively unscathed." But in some metals, users, including those in SouthKorea, were able to shift the problem to European and US consumers of primary metals by increasing exports of semi-products, he said.

Helped by the devaluation of the won currency, South Korea boosted 1998 cold-rolled stainless steel exports by more than 90 per cent, which led to a production increase of some five per cent despite a 30-40 per cent drop in domestic demand, Lennon said.

It also raised zinc coated sheet exports by 68 per cent last year, allowing output of such sheet to rise by five per cent, while domestic demand dropped by 27 per cent, he said. Lennon said South Korean net exports of copper semi-products doubled in 1998, with a jump in sales to China, which limited the country's fall in refined copper consumption to 11 per cent.

Only in the aluminium sector, which saw primary aluminium demand shrinking by 28 per cent, semi-product manufacturers failed to export their way out of trouble, because of a major downturn in the construction industry throughout Asia, he added.