LONDON (Commodity Online): No country in the world has such a rising appetite for base metals like copper, aluminium, lead and precious bullion metals such as gold, silver and platinum like China. The dragon country is going all out to amass massive quantities of base metals and bullion in its reserves.

Following is an analysis from BNP Paribas Fortis metals monthly - December 2009, Fortis/VM Group on China's thirst for base metals and precious metals:

China's rapacious appetite for base metals has shaped this market throughout 2009; without China, and the promise of its long-term growth, prices would be languishing at almost half their current level. Now that China has reiterated it will maintain a relatively loose monetary policy in 2010, and forecasts for China's GDP growth next year are already exceeding 9%, the year ahead is unlikely to see much price weakness for base metal's if anything, the reverse. We also expect speculative investment levels to rise, given what is now almost certain to be an effectively zero interest-rate environment during the whole of 2010. That spells persistent weakness for the US dollar and, with economic recovery likely across almost all the OECD countries, 2010 is shaping up to see base metals prices shift beyond their 2009 highs and perhaps challenge levels last seen in H1 2008. The only real negatives are the massive inventories and the threat of over-supply, as miners and smelters ramp-up by too much, and too soon.

Gold

The gold price soared above $1,200/oz in December and then fell back $70/oz in a single day. With the weight of investment, money that has built up in gold over the last few months such volatile trading is inevitable. Until we have a much more stable global macro-economic environment, we see gold prices remaining firm at high and possibly higher levels, although the waters will become progressively choppier.

Silver

Silver underperformed gold in the latest leg of their recent tandem-rally, and slightly outperformed, when gold gave up some of its price gains. In the longer-term, we envisage silver performing relatively better than gold, given its greater industrial demand profile and potential new applications. But short-term the focus is on financial and economic uncertainties - and the mini-panic will sustain gold much more than silver.

Platinum

Jewellery demand continues to provide a floor to the platinum market, as shown by the latest data regarding Chinese demand. Auto catalyst demand, however, could be hit by what is looking like a much lower figure in Germany in 2010 for new car sales.

Palladium

Palladium has fallen back, along with other precious metals, but its supply demand fundamentals have been improving. The only major concern for its medium-term outlook is whether the recent remarkable pace of Chinese car sales growth can be sustained.

Aluminium

Aluminium demand is improving slowly, but production is relentlessly rising. How this dynamic plays-out, and the extent to which huge exchange and off market stocks might be eroded, will determine the price trajectory in 2010. For now, we regard this as the base metal least likely to rise significantly in price next year - at least until visible stock levels come down sharply.

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