Base Metals Can’t Get Respect
Jun 5th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mixed again on Wednesday. Copper had some big ups and downs but in the end was little changed as it finished at $3.6206/lb., down a penny and a half.
Nickel dipped below the $10 mark in the pre-dawn hours, but rallied back to close at $10.1741/lb., up more than 9 cents. Zinc had an up day, adding a bit less than 2 cents, to $0.8879/lb. Aluminum sank for most of the day, just coming off its lows late to end at $1.2883/lb., down nearly two cents, while lead sagged after two positive days, shedding a penny and three-quarters, to $0.9046/lb.
Analysts attributed copper’s slight decline mostly to technical selling.
“Sentiment in the whole complex in metals is weaker,” said Larry Young, a senior trader with Infinity Futures. “Traders are looking for a rationale to decide to turn. But right now sentiment is to the downside, so traders are staying with the trend.”
The lack of enthusiasm has been maintained over the past couple of days by Ben Bernanke’s remarks about interest rates and the economy in general.
“Bernanke’s comments were misguided and his speech meant negative news for copper demand,” said Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut. “He has got to focus on growth and avoiding a recession. He indicated that he’s not interested in cutting rates and may even want to raise them.”
Bernanke had nothing positive to say about the housing sector, the backbone of copper use in the U.S., as he foresees a continuing contraction of construction and overhang of unsold homes.
“Until the housing market, and particularly house prices, shows clearer signs of stabilization, growth risks will remain to the downside,” Bernanke said.
That wasn’t what industrial metals traders wanted to hear.
Adding to the gloom was a report yesterday that showed European retail sales slid 2.9% in April. That was more than three times as much as economists had forecast, and it followed reports earlier in the week showing that manufacturing has cooled in both the U.S. and China.
“A background of slowing consumption growth” will weigh on copper as prices “trend downwards as the year progresses,” analysts at Standard Chartered Plc wrote.
Source: Base Metals Can’t Get Respect
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