Declining prices of industrial raw materials, despite occasional rebounds, are expected to help boost corporate earnings in 2007, economists and stock analysts said.

"Companies that specialize in processing base metals are expected to benefit the most from the falling prices of raw materials," said Du Xiaohua, an analyst with China International Futures (Shanghai) Co Ltd.

Manufacturing companies that use large quantities of metal parts also stand to gain from falling prices. Du and others said lower prices would have a significant impact on the bottom lines of export firms operating in highly competitive overseas markets with slim profit margins.

The commodity market rally that sent the prices of various metals, especially copper and aluminum, to dizzying heights last year began to fizzle out toward the end of 2006.

On the London Metal Exchange (LME), the copper price slid 35 percent from its highest level of $8,800 per ton last May. The aluminum price also fell 25 percent from a record high of $3,300 per ton. It has since recovered by about 15 percent.

Prices of these key metals on the Shanghai commodity market have largely kept pace with the international trend, which is dominated by rising inventories in producing and consuming countries. The Shanghai commodity market has been further affected by the massive diversion of investment funds to the booming stock market in recent months.

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