*Aluminum and nickel prices have worst chance to rebound* By Tom Stundza — Purchasing, 4/1/2009 12:13:00 PM

Copper and zinc are the base metals most likely to react fastest with higher prices to an eventual upturn in demand, according to a report by Barclays Capital. In the latest edition of their Commodity Refiner report, analysts at the London-based bank write: ?We expect copper and zinc prices to be the first and the fastest to rebound once demand improves, while the losers, aluminum and nickel, will see prices recover the last and the least.?

But, while they believe the fiscal stimulus programs in play in the U.S., the European Union and China eventually will spur demand for nonferrous metals used in construction activities, they admit that probably won?t occur until 2010 or 2011. And they admit that copper and zinc metals also are facing the same potential supply-side challenges as aluminum and nickel–large surpluses at the mines and smelters and stockpiles at exchange warehouses.

Looking at their most-bullish forecast, Barclays is forecasting an average copper price of $1.82/lb this year, down from $3.16 in 2008 and rebounding to $2.49 in 2010 and $3.18 in 2011.

A separate survey by Macquarie Group of Sydney says that ?commodity demand is in the eye of the storm and that there may not be too much further downside to global demand. Indeed, the falls in global industrial output are close to matching those witnessed in the very sharp and deep downturn in the mid-1970s. If the current cycle continues to track that of the mid-1970s, industrial output would bottom sometime over the next six months.?

However, with global demand not expected to recover until next year, and the rate of future growth uncertain, the Macquarie bank analysts say that copper demand will drop 9% this year and sees reduced demand for aluminum, nickel, zinc, lead and tin–suggesting that supply gluts could depress pricing overall through 2010.

Meanwhile, prices of commodities dropped for a third straight quarter, the longest losing streak since 2001, as demand for raw materials from crude oil to nickel shrank and producers failed to cut output fast enough, according to a *Bloomberg* report.