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Metal price falls level-off, pointing to market bottom

Metal price falls have eased in the first quarter of 2009, pointing to market recovery, according to new data.

According to BDO Stoy Hayward’s Construction Commodities Index, the price construction firms paid for aluminium, copper, lead, tin and zinc all fell at a much lower rate in the first quarter of 2009 than in the last quarter of 2008.

The only exception was steel, which declined at 1.5 times the rate it did last year.

Head of Construction at BDO Stoy Hayward Richard Kelly said: “The construction sector has had to try and wear significant price hikes over the past 12 to 18 months which, coupled with the downturn in the global economy, have nearly crippled the sector. The fall in metal prices, although not as dramatic as the previous quarter, will still come as a welcome relief to the sector.”

“Looking at the bigger picture though, the results suggest that metal prices are starting to show signs of easing. It would be too optimistic to state that these are the first signs of ‘green shoots in the construction sector’ as demand for metals and therefore construction projects increases, but they could be amongst early indicators that the market is beginning to level out.

Copper prices are seen as an indicator of the industry, and prices in this commodity have shown the greatest recovery.

The price of copper fell just 1% in the first quarter of 2009, compared to a fall of 51% in the last quarter of 2008. “Copper is often seen as one of the bell weathers of the economy – when it levels off or increases then economists start to get excited.

“The price of copper has slowly been increasing throughout the quarter, breaking through the $4,000 (£2,747) mark for the first time in nearly five months. If the weakening dollar continues apace and the Chinese continue to re-stocking their supplies for construction, then we could well be seeing a positive effect on the UK’s construction market in the near future,” said Kelly.

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