GOLDMAN TEMPERS ROSY COPPER CALL

Goldman Sachs Group Inc. has pared back the bullish copper forecast it issued last year, saying the tightness originally expected to develop in the second half of 2011 is unlikely to materialize for another year.

Spot copper on the LME crossed the $10,000 per tonne mark in early February and hit a record high of close to $10,148 on February 14th and has averaged around $9,622 per tonne so far this year.

"Recent events pose downside risks to demand, potentially deferring our critically low inventory scenario. As a result the risk/reward in this position has diminished", Goldman analysts said.

LME copper stocks have grown some 14% since the start of the year, while those on Comex have risen some 30%.

The physical supply situation has been further supplemented by continued political unrest in the Middle East and North Africa.

"We believe the growth conditions for those inventory draws have changed and our critically low inventory scenario may get pushed further out, creating downside risk to our late 2011 forecasts and some downside relative to current near record high forwards" the Goldman analysts added.