Base Metals Listless
Feb 2nd, 2009 | By Doug Casey | Category: Financial NewsThe base metals were all modestly lower on Friday. Copper declined into the New York open, and though it rallied from there, came off its highs late to finish at $1.4318/lb., down more than a penny. Nickel fell below the $5 mark and, though it struggled mightily to regain it, fell just short at $4.9986/lb., down 7 cents. Zinc was off through most of the day, ending at $0.4835/lb., down three-quarters of a cent. Aluminum was weak, closing at $0.592/lb., down a penny, while lead sank to $0.5082/lb., down almost a penny.
While copper was down in late trading, the early rally was enough for Michael Gross, an OptionSellers.com analyst in Tampa, Florida, to comment that, “With the oil moving up and gold being higher, that got people into copper today … A lot of traders didn’t want to go home over the weekend short on copper.”
But Gross hastened to add that, “It’s mostly a technical play, based on gold and oil. The fundamentals are still weak.”
That was certainly borne out by the stockpile situation, as copper inventories monitored by the LME shot up by 13,850 metric tons yesterday, to 491,525 tons. That brought the gain for January to a stunning 150,000 tons.
Also factoring in, said Pete Sorrentino, of Huntington Asset Advisors in Cincinnati, was that, “There were some unrealistic expectations about what the stimulus plan was going to mean” for copper, and he predicted that prices will remain depressed.
That’s also the view of Chip Hanlon, of Delta Global Advisors (NYSE:SEA) in Huntington Beach, California, who maintains that, “The global economy is entrenched in such a deep deleveraging and slowdown that it’s going to be a few months at least before we can see a recovery.”
In company news, on Thursday we reported that Vale Inco had stopped shipping nickel concentrate from the giant Voisey’s Bay mine in Eastern Canada. Yesterday, Vale announced it had reached agreement with the province of Newfoundland and Labrador, and that shipments are ready to resume.
And from Chile comes word that its copper output fell 8.9% in December and 4.2% for all of 2008, as the world’s biggest copper producer suffered supply disruptions and saw ore grade fall at some of its biggest mines.
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Doug Casey is a contrarian investor, sought-after public speaker and author of several books. His work "Crisis Investing" held the position of # 1 bestseller on the New York Times list for 26 consecutive weeks. Doug's unusual views on the economy - and just about everything else - have gained a huge following in the investment community, and it certainly helps that his stock recommendations of undervalued junior exploration companies have made his subscribers millions. Now in its 27th year, Doug's monthly newsletter, the International Speculator, is one of the most established and esteemed publications on gold, silver and other natural resource investments. Together with the Casey Energy Speculator, it covers a broad range of carefully selected stocks with the very real potential of double- and triple-digit returns within 12 to 24 months.