Base metal prices have likely bottomed - analyst

TORONTO, April 8 (Reuters) - A lasting recovery in base metal prices may still be a way off, but steady demand from China and recent output cuts mean that the lows hit last year will likely hold up as the bottom of the market, an analyst at London-based ETF Securities said on Wednesday.

Speaking on a conference call, head of research Nicholas Brook said he expects a fairly steady performance from metals such as copper, zinc, nickel and aluminum in the near term -- barring unexpected shocks such as a further drop in demand from China or a retrenchment of the global financial crisis.

"I think for industrial metals to drop back through those levels you'd have to see some really horrific news," he said, adding that he put the chances of that at a "relatively low probability."

"Based on that I would say that industrial metals have probably found a floor," he said.

Prices for base, or industrial, metals eased through most of last year, but really fell hard as the credit crisis reached full swing in the final months of 2008.

While prices are still well off highs reached in the past few years -- nickel, for instance, is about 80 percent off its 2007 highs -- recent strength in copper in particular has raised some hopes that the market has bottomed, and that has allowed some miners to raise funds through equity issues.

Brooks predicted prices in the short term would be underpinned by China, which has announced aggressive infrastructure spending.

"What happens in China really matters a lot," he said.

Strong gains are not likely for some time, though, due to high inventories and fairly weak overall demand.

In the longer term, prices could spike sharply higher as a rebound in global demand runs into pinched supply following cutbacks at mines and development projects.

Several mining companies have cut activity in the past year due to both lower prices and reduced access to financing. (Reporting by Cameron French; editing by Rob Wilson)