Base Metals Escape Sell-Off
Aug 16th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed in undramatic trading on Friday. Copper bottomed late in the pre-dawn hours, but moved steadily up from there to regain positive territory, finishing near its intraday high at $3.3716/lb., up two-thirds of a cent.
Nickel was down until mid-morning and, though it gained thereafter, failed to make up the lost ground, closing at $8.3703/lb., down more than 3¾ cents. Zinc overcame a late morning selloff to remain in the black, ending at $0.7558/lb., up a penny and a half. Aluminum wasn’t up enough in New York to overcome earlier weakness, shedding two-thirds of a cent, to $1.233/lb., while lead had a quiet day, adding a quarter-cent, to $0.753/lb.
Copper held up as investors focused on fundamentals and ignored the carnage that was consuming most of the other commodities markets, with the UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials losing as much as 2.3% yesterday.
“I think copper has decoupled from the financial angle of the metal, and didn’t get hit because most of the selling was from an investment angle. We’re thinking that the supply/demand picture (for copper) is now supportive,” said Larry Young, senior trader at Infinity Futures in Chicago.
The metal has recovered well after hitting its 6-month low on Tuesday.
Traders are considering potential supply constraints after reports of reduced output during the week from BHP Billiton (NYSE:BHP) and Jiangxi Copper.
And some analysts think there’s a lot of pent-up demand in China. “You were originally seeing a pause in China’s consumption. And I think there’s an expectation that they’re not doing anything during the Olympics. But there’s also an expectation that that’s going to pick up (afterwards),” said Frank McGhee, of Integrated Brokerage Services in Chicago.
Nevertheless, the demand side of the equation continues to appear bleak. On Thursday, the eurozone reported the first economic contraction since the common currency was adopted in 1999, and yesterday it was reported that Hong Kong’s economic growth cooled to the slowest pace in almost five years.
Source: Base Metals Escape Sell-Off
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