With the world recovering from last year's economic collapse, UBS Securities analysts Brian MacArthur and Onno Rutten have made major upgrades to their commodity price forecasts and mining stock valuations.

In a note to clients, they wrote that global lead indicators suggest the world is entering a cyclical recovery, even if China is excluded. And in the case of China, they believe the country is less overstocked than some people expect, even after a huge wave of metal imports through the spring and summer.

They wrote that supply conditions for most metals look tight after many companies cut production and various operations face supply challenges. And they believe global inventories could be stretched once the rest of the world (apart from China) resumes its normal consumption patterns.

"Metal demand has historically sharply rebounded in the 6-18 months after a recessionary trough, and then normalized by 18-24 months after the trough," they wrote.

The analysts upgraded their 2010 price forecasts for nickel (up 43% to US$10.00/lb), copper (up 32% to US$3.30/lb), zinc (up 13% to US90¢/lb), and aluminum (up 19% to US95¢/lb) among others.

As a result, they also raised their price targets on miners across the base metal space, and four of them were upgraded to "buy" from "neutral": Equinox Minerals Ltd., Quadra Mining Ltd., FNX Mining Company Inc., and Sherritt International Corp. Their favourite names are First Quantum Minerals Ltd., Freeport-McMoRan Copper & Gold Inc., and Teck Resources Ltd.