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Leading indicators point to pick up in demand for base metals: Barclays

Wednesday, 22 February 2012 | 00:00
Barclays Capital says its leading indicators for base metals demand point to a sharp pick-up in demand momentum toward the end of first quarter and into the second quarter. Analysts cite recent purchasing managers indexes in U.S., China and elsewhere.
“This does not discount the cyclical slowdown that EM (emerging markets) and the global economy still face for this year, but it probably encourages market participants to look beyond the downturn and should bode well for metals demand,” Barclays said.
“The latest reading of our leading indicators for base metals demand now points to a clear pick-up in demand growth starting in late Q1 11. Our leading indicator experienced a sharp m/m (month-on-month) increase, the sharpest increase since the start of our series in 2005,” Barclays added.
The manufacturing order book index has increased in China, the U.S. and Europe for the past two months, while stocks of finished goods have decreased for two straight months, Barclays continued.
“In addition, we have seen increasing signs of stabilization of ‘expected purchasing’ of raw materials--an index which compares new and unfilled orders with inventories of raw materials--and also of ‘expected production’ of manufacturing goods, an index which compares stocks of finished products with new orders of manufacturing goods,” Barclays concluded.
Source: Commodity Online
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