Iron Ore

The strong rally in Australian equities since the credit crunch bottom has been driven almost exclusively by resource stocks.

Participants at Metal Bulletin’s recent Stainless and Special Steel summit in Finland were broadly positive on the market outlook and expect nickel prices to move higher.

Strength in Asian markets kept steel prices steady over summer but industry consultant MEPS sees scope for higher prices thanks to tighter markets and higher raw material costs.

Base metal prices have peaked according to National Australia Bank but there is further upside in the bulks and rural commodities, particularly wheat and dairy.

News Sims Group will merge with Metal Management in the US has not changed the broking community’s mixed opinion on the stock, some arguing it is overvalued while others see further upside.

Barclays Capital has lifted its long-term base metal price forecasts and expects copper, lead and tin to gain the most, while also increasing its gold price outlook for the rest of this year.

In response to an ASX query, Sims group has cut first quarter profit guidance.

Merrill Lynch has made its latest round of commodity price upgrades with some significant movements, while Paladin’s Borshoff tries to talk up the stock.

A rumour hit the market late yesterday that BHP and CVRD were looking to take out Rio, while Woodside has just initiated what may be an enormous LNG deal.

The world’s second largest economy is on the brink of recession, and a strong yen is only going to exacerbate the problems. In the meantime, global commercial paper markets remain frozen.