The base metals were all deeply in the red on Thursday. As soon as copper had closed above the psychologically-important $4 mark, it gave it right back, dropping precipitously through the pre-dawn hours and then trading flat to finish near its intraday low at $3.8945/lb., down 21 cents.

Nickel experienced a similar fall, closing at $9.2374/lb., down more than 31¾ cents. Zinc recovered some ground after its pre-dawn falloff, ending at $0.792/lb., down 4 cents. Aluminum lost ground but held up better than the other metals, losing 3 cents to $1.4036/lb., while lead had a ghastly day, falling well below the 70-cent mark in the pre-dawn hours before rallying to just above it at $0.7027/lb., still down 6 1/3 cents.

Lead’s fall was its worst in six weeks, as the former market darling is trash now. Analysts cited the steep dropoff in the auto industry, as American consumers cut back on driving and vehicle purchases. 70% of lead production goes into car batteries.

“We’re bearish on lead,” said David Thurtell, an analyst at BNP Paribas (BNP) in London. “High oil prices will damage demand for new vehicles and people will also get rid of their second cars or old ones.”

Lead has lost 39% already this year, and worse yet, as Bloomberg reported: “Supply will outpace demand by 130,000 tons this year, Goldman Sachs(GS) JPWere Pty Ltd. said July 2. That’s 29 percent more than all the lead held in warehouses monitored by the LME.

“Inventories tracked by the bourse have more than doubled this year, to 100,675 tons. Open interest, or outstanding contracts, rose 0.9 percent this week as prices fell, indicating investors are adding to bets on further declines.”

Meanwhile, copper supply worries eased as the Peruvian strike faltered. Mine workers can’t maintain the strike after some miners broke rank and returned to their posts, said Cirilo Yarihuaman, spokesman for the Mining Federation, which organized the demonstrations.

“Workers at three mining operations in Peru including Southern Copper Corp.’s Ilo smelter ended a strike yesterday after the government said the action was illegal,” Bloomberg wrote.

Source: Base Metals Hammered