ANALYSTS' VIEW-Reuters survey on metals market balances

LONDON, Aug 12 (Reuters) - Reuters has surveyed 11 analysts on their views on when the copper, aluminium, zinc, lead and nickel markets could move into deficit on a sustained basis. The survey was carried out over the last two weeks. Below are a selection of comments from analysts on deficits in industrial metals markets. COPPER JOHN MEYER, ANALYST AT FAIRFAX Market turns to deficit in Q2 2011... as Chinese demand combines with recovering US demand. MAX LAYTON, ANALYST AT MACQUARIE BANK We forecast a half a million tonne surplus this year, it looks like most of that has accumulated in the first half. So, we see the market roughly balanced in the second half. Assuming a modest pick up in world ex-China growth and continuing strong growth in Chinese copper demand the market looks like it will move into deficit next year. STEPHEN BRIGGS, ANALYST AT RBS GLOBAL BANKING & MARKETS The demand side is not that spectacular, nor was it in the last cycle and it probably won't be in the next cycle. It's entirely a supply-side story. The bits and pieces add up, but not to a huge amount and restarts won't amount to much either. The market will switch from surplus to deficit in 2011, but potentially it could start to move into deficit towards the end of next year. ANGUS MACMILLAN, CONSULTANT When we see demand turning around there will not be enough metal, with or without Chinese stockpiles. Demand is still well down on last year, and is unlikely to pick up until next year. ALUMINIUM DAVID WILSON, ANALYST AT SOCIETE GENERALE There already seems to be the beginnings of a breakdown in producer discipline. We're beginning to see more restarts. With price levels close to $2,000 a tonne, the vast majority of smelters can more than break even. There is about 4.6 million tonnes of aluminium in London Metal Exchange warehouses and rumours of 2 million tonnes of inventories in China, it's significantly over supplied. We're beginning to see more restarts. JAMES KING, CONSULTANT I'm quite optimistic about consumption. I don't see a prolonged or double dip recession. Excess stocks are estimated at 1.9 million tonnes for May 2009 and are not forecast to be eliminated until June 2012. Stocks as of mid-2009 were 57 days worth of consumption, compared with 24 days in 2008. Even if stocks fall in absolute numbers they will still stay high in relation to consumption for a long period. It'll be 2012 before the market starts to get really tight. MAX LAYTON, ANALYST AT MACQUARIE BANK We don't see a deficit in any of our forecast years. It's very difficult to find enough cuts globally to balance the market despite quite a robust rebound in demand being assumed. ANGUS MACMILLAN, CONSULTANT Aluminium has by far the worst fundamentals. The market is still in sizeable surplus. How much longer China's State Reserves Bureau is willing and able to soak up the western surplus is anyone's guess. We still need to see more cutbacks. A large amount of stocks may not be immediately available, but they are still huge and far bigger as a proportion of the market than any other metal. JOHN MEYER, ANALYST AT FAIRFAX There remains substantial overcapacity although producers are cautious many remain in production to preserve jobs and retain market position. Demand would need to recover much faster than anticipated to change our view. ZINC MAX LAYTON, ANALYST AT MACQUARIE BANK We see the market balancing in the fourth quarter of this year, but not moving into a sustained deficit until maybe 2011, basically because Chinese demand will be growing strongly and the supply response will not be enough to meet that demand. STEPHEN BRIGGS, ANALYST AT RBS GLOBAL BANKING & MARKETS Christmas has come early for producers. High prices will bring restarts forward and could put off for a bit longer the time when the market will go into deficit. JOHN MEYER, ANALYST AT FAIRFAX Market could turn to deficit in Q3 2011 as some recovery in the construction sectors in Europe and the US could see restocking. Some recovery in the auto sector will also help as autos and construction account for around 70 percent of demand. LEAD JOHN MEYER, ANALYST AT FAIRFAX Market could turn to deficit in Q2 2011 as the trend towards electric cars drives demand for new batteries. The export of relatively poor quality Chinese batteries is generating increased short-term demand as batteries need to be replaced more frequently. While the manufacture of new cars creates demand, the use of older cars also generates replacement battery demand. In recessionary times the less frequent use of cars can make batteries fail more frequently requiring shorter time to replacement. ANGUS MACMILLAN, CONSULTANT Stocks aren't high and we're heading into the battery season in the Northern hemisphere. We could see the market back in some sort of balance in Q4 2009 with uncomfortably low stocks. NICKEL MAX LAYTON, ANALYST AT MACQUARIE BANK There's been massive destocking for the past nine months in stainless steel, particularly in the world ex-China. An end to destocking means increased demand for stainless steel containing raw materials including nickel. We would expect there would be significant pick up in nickel demand over the next six to nine months. The risk is there is a large amount of nickel pig iron capacity, profitable at current nickel prices . DAVID WILSON, ANALYST AT SOCIETE GENERALE We already see the start of some restocking in stainless steel ... which will gain momentum next year as we see a more broad-based economic recovery. You can also argue that the prospects of some of the major laterite projects like Vale's Goro in New Caledonia are still problematic. I find it difficult to believe ... there won't be significant teething problems with Goro. STEPHEN BRIGGS, ANALYST AT RBS GLOBAL BANKING & MARKETS Nickel output cutbacks can be reversed and there's a reasonable project pipeline. ANGUS MACMILLAN, CONSULTANT Despite the recent supply disruption there is no shortage of nickel. (Reporting by Pratima Desai and Karen Norton; editing by Sue Thomas)