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Earnings for the aluminum industry were strong in 1997 and are expected to remain so in 1998 with limited new capacity and increased product demand inseveral markets. However, there is a surplus of copper, demand is expected to outstrip production, making the industry's future uncertain. Investors should, however, avoid both aluminum and copper stocks in 1998 due to the future uncertainty in their markets.

Aluminum demand has had an annual 5% increase since the early 1990s, and capacity is forecast to remain about the same. However, the industry is untimely in the late 1990s due to the Asian financial crisis. The copper industry is also untimely in the late 1990s and is unfavorably ranked, with weak demand and increased supplies. With a few exceptions investors should avoid stocks in either the aluminum and copper industries in the 1990s.

US demand for prefabricated products is expected to continue rising in 1997 and 1998, along with economic growth. The aluminum inventory surplus is being reduced, and Russian exports are not expected to rise. Investors should avoid the industry, although some companies will have strong profits. Copper supplies may outstrip demand, though usage is strong. However, various factors indicate that investors need to make selective commitments.

Aluminum industry earnings rebounded in the March, 1997 quarter to continue an increase trend that began in 1996 but aluminum stocks carry poor Timeliness rankings. While they are poor short-term investments, some aluminum companies could be good 3- to 5- year prospects. Outside of one or two copper mining companies which offer mild investment possibilities, the copper industry should have price drops in both halves of 1997 which will continue sharply downward until 2000-2002 and limit investment possibilities.

Industrial users of aluminum are expected to restock their inventories in 1997, and the supply of aluminum has dropped since 1994. The more favorable balance of supply and demand has increased prices and profits for aluminum, and these stocks have increased timeliness in 1997. Copper demand remains strong and the supply has been reduced. However, accurate reporting and increased regulation are problems, and copper stocks are not timely in 1997.

The aluminum and copper industries are not good investments in 1996 or 1997. The imbalance between supply and demand for the aluminum ingot international market is the major problem for this market. Earnings have been weak during the first nine months of 1996 and profits are expected to be low. The profits of the copper industry decreased during 3d qtr 1996.

Sumitomo's announcement of unauthorized trades hit the copper market hard. Prices dropped almost 25% in June and July 1996. Dividends are above average, performance is off and the ranking contains no stocks with an above average timeliness factor. Cyprus Amax withdrew a $200 million offering after its stock price fell and construction of a Chilean mine was delayed by Gibraltar Mines because of lack of underwriting.

An oversupply was created when large amounts of Russian aluminum were marketed to the West. A Memorandum of Understanding temporarily closed down some global production capacity, but inventory decline has slowed. Demand should increase with a better economy. These stocks are subpar for the long term. Increased supply of copper will lower prices, and demand growth is hard to predict. These stocks are not timely in 1995 or for the next three to five years.