The base metals had a uniformly terrible day Thursday, as spot prices for copper, nickel, zinc, aluminum, and lead all tumbled. Copper dropped quickly throughout the day’s trading and finished down 6 cents, at $3.6968/lb, despite a mid-morning rally. This represented a six-week low in copper prices.

Nickel followed copper’s lead as prices fell precipitously, as the metal lost 44 ½ cents to close at $8.4361/lb, a two-year low. Zinc started the day well, reaching an intraday high over $0.87 in early-morning trading, but soon followed the other base metals into the red, sliding to $0.8385/lb., down 1 ½ cents. Aluminum dropped as well, closing down almost 2 cents, at $1.3206/lb. Lead erased some of its gains over the previous two days, falling back below the $1 mark to $0.9902/lb., down 2 cents.

Copper’s losses were the result of a poor outlook for global demand as sales of previously owned homes in the U.S. fell last month to their lowest levels in more than a decade, according a National Association of Realtor’s report. This evidence of the continued housing slump bodes poorly for copper demand, which is largely dependant upon construction of new housing.

Concern about falling demand is outweighing fears of news of declining mine output from Codelco, the largest copper producer in the world. Codelco announced that labor problems and declining ore quality might cut production for the fourth consecutive year.

According to Matthew Zeman of LaSalle Futures Group, traders are “shrugging off” supply concerns because of “the outlook for a global slowdown and the anticipation of falling demand.” He continued that “people are thinking, ‘What difference does it make anyway,’ since demand is going down.”

Nickel’s huge drop was also fueled by falling demand. Robin Bhar of Calyon wrote that “There has been increasing evidence of weak demand from the stainless steel sector in the third quarter.” Production of stainless steel accounts for two-thirds of all nickel consumption.

Source: Base Metals Fall