Base Metals Beaten Senseless – Rising Stockpiles Blamed
May 30th, 2008 | By Doug Casey | Category: Gold MarketThe base metals endured a serious bloodbath on Thursday. Copper fell off a cliff at the open of the New York session and never recovered, finishing at its intraday low of $3.6416/lb., down 10½ cents.
Nickel followed suit, sinking below the $10 mark, but recovered slightly to edge back over it and close at $10.0115/lb., down 22 cents. Zinc was pounded, barely coming off its intraday low to end at $0.8951/lb., down 5¼ cents. Aluminum wasn’t spared, shedding 3¼ cents to $1.2899/lb., while lead cratered as well, giving up nearly 4½ cents, to $0.8629/lb.
The base metals took an absolute hammering on Thursday, as traders cast an eye on the relationship between rising stockpiles and potentially diminishing demand, and came away with a lot of negative thoughts.
The stock increases are seemingly happening across the board.
Copper inventories monitored by the LME were up 600 metric tons (0.5%) yesterday, to 126,400 tons. It’s the highest level since March 13, and the metal has gained 14% just this month. Analysts are also expecting Shanghai to report an increase of some 7,000 tons this Friday.
Among the other metals, lead inventories showed an increase of 1,550 metric tons yesterday, while zinc was up a hefty 7,850 tons.
Lead is also “weaker at present in part because demand is seasonally soft,” said Lehman Brothers analyst Michael Widmer.
Factor in currency as well. “The stronger dollar is of course undermining [copper],” said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “The bond market is heading down, which means interest rates are going up.”
And Ed Meir, of MF Global, cited “the sluggish pace of recent imports” into China.
In company news, Rio Tinto remained on the offensive against BHP Billiton’s takeover bid. Rio CEO Tom Albanese predicted seven years of near-double-digit annual production growth as he argued that BHP’s bid is too low.
Rio can expect compound annual output growth of 8.6% through to 2015, and the company is well placed to take advantage of an expected doubling of world demand for metals and minerals by 2022, Albanese said.
Source: Base Metals Beaten Senseless – Rising Stockpiles Blamed
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