The U.S. Demand for metal may be “bottoming out,” according to analysts at Desjardins Securities, who add there have been “several positive signs” that the worst may be over for the American economy.

In a report Tuesday, Desjardins says that it does not expect any further downside in metal consumption in the U.S. “In our view, US metal consumers have already adjusted to recessionary level of metal demand,” the report says. The analysts also note that the current economic slowdown in the U.S. Is “probably the most ‘over forecast’ economic event of the past 20 years from a metal consumer’s perspective.”

Purchasing managers were “inundated” with negative forecasts over a year ago, and heeded these warnings, the Desjardins report says. “Consequently, there was a significant contraction in metal demand in 2007.”

The analysts point to several positive signs that things might not be as bad as predicted. These include: the Federal Reserve Board’s indication that the easing of U.S. Interest rates may be at an edn; March job losses were well below consensus forecast; and leading indicators for U.S. Metal demand appear to be trending upwards, with the primary metals leading index increasing 2..7% in March and its six-month grwoth rate rising to 3.5% in February.

In its forecast, Desjardins says it assumes that U.S. Demand will not recover this year and demonstrate only “anaemic” growth, based on consumer restocking, in 2009. “Nevertheless, we expect world demand to outstrip supply through 2009.”

Zena Olijnyk