Base Metals Flat
Nov 19th, 2008 | By Doug Casey | Category: Financial NewsThe base metals did little more than tread water on Tuesday. Copper sank from the pre-dawn hours to mid-morning, but then rallied strongly to the noon hour, but faded again from there, finishing at $1.611/lb., up a tenth of a cent. Nickel crested at $4.70, also around the noon hour, then gave back most of the day’s gains, closing at $4.607/lb., up less than a half-cent.
Zinc pushed higher from the pre-dawn hours through the morning, only easing a bit late, to end at $0.5358/lb., up 2 cents. Aluminum too had a morning rally, but wound up little changed, adding less than a half-penny, to $0.8354/lb., while lead was little changed at $0.577/lb., up less than a quarter-cent.
Copper came in nearly unchanged after a down/up/down session in which the industrial metals barely showed any signs of life.
“Worries about the international economic outlook have continued to dominate base metals trading,” wrote David Moore, commodity strategist at Commonwealth Bank of Australia, wrote in an e-mail, and he projected that prices will remain “under downward pressure.”
In addition, “We continue to see this tight correlation between the copper and equity markets,” said Ralph Preston, futures analyst with HeritageWestFutures.com, and that held yesterday as equities continued their rollercoaster ride.
However, a floor of sorts was set under copper by by speculation that China’s Copper Smelters Purchase Team, which represents the country’s biggest producers, may jointly cut production.
But Jia Zheng, an analyst at Southwest Futures Co. in Shanghai is skeptical, pointing out that, “Joint production cuts in reality are very difficult to achieve as each smelter has their own output plans … The zinc and aluminum producers tried to do it earlier this year, and we’re not seeing any results from their meeting.”
And in copper futures trading, the ‘contango’ – or discount at which nearby contracts are trading compared with those further forward — widened to $51 per metric ton. That’s the highest level in nearly a year, and indicates that the market is well supplied.
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