Don Coxe, global portfolio strategist at BMO Capital Markets, says that, in the short-term, base metals prices will be weaker as the market tries to work out where the US and Chinese economies are heading.
"The next six months are going to be tough. There will undoubtedly be some kind of effect on demand for base metals if the US goes into recession." But he says the long-term outlook is positive and argues that the entire sector will be rerated upwards over the next few years.
Mr Coxe adds that high energy and food prices combined with the weak dollar will lead to the return of serious inflationary pressure for the first time since the early 1980s.
Even if demand for their products weakens, manufacturers will find that it is more and more expensive to get hold of basic materials. This will be exacerbated by the fact that new mines are taking longer than expected to come into production because of a shortage of skilled workers and specialist equipment.
He says this will mean mining companies' assets will be more highly valued in future. "Mining companies have assets that cannot be duplicated. The stock prices will be sustained by a new set of buyers that need a hedge for inflation."
Not all metals prices and mining stocks have the same outlook, however.
For instance, despite recent price declines the lead market still looks tight and there is the potential for a pick-up in buying during the winter when battery demand is seasonally stronger.
Mining companies are encountering growing political risk as higher commodity prices lead to more "resource nationalism" and governments demanding a greater share in the profits from mines in their countries.
So it is likely that companies with projects in more stable parts of the world will be a better bet, says Mr Coxe
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