Base Metals Listless
Feb 24th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were mixed on Monday. Copper was still in the green at mid-morning, but then skidded, dropping just into the red and finishing at $1.4496/lb., down a quarter of a cent. Nickel hit a late morning slump that dropped it from positive territory to its intraday low of $4.2139/lb., down 3 2/3 cents.
Zinc showed little movement in either direction, ending at $0.4855/lb., up three-quarters of a cent. Aluminum had a daylong slide, giving up nearly a penny and a quarter, to $0.5618/lb., while lead survived a late-day slump to close at $0.4562/lb., up a tenth of a cent.
Copper managed to close out a day of listless trading without much of a loss, as stockpiles played a major role in stabilizing the metal’s price.
Inventories monitored by the LME posted their second decline in the past week, falling by 950 metric tons yesterday, to 544,650 tons. That was just a drop in the bucket compared with Friday’s build of 17,350 tons, but the slightest good news is seized upon in this market.
The industrial metals were also helped by financial regulators’ pledge to inject additional funds into the nation’s major banks to prevent their collapse.
“People do seem to like the bank plan,” said Donald Selkin, the of National Securities Corp. in New York. “It helps bring some enthusiasm. If they can inject enough liquidity and get banks lending again, it could start to move the economy.”
But any optimism was effectively capped by the broad selloff in the equities markets yesterday.
Quite the opposite, “a sizable rally in the U.S. equity markets,” is needed “to shake copper out of the doldrums,” said (NYSE:MF) MF Global’s Meir.
However, China’s imports of refined copper shot up in 2008, climbing 41%, year over year, thanks to attractive margins and possible buying by the State Reserves Bureau.
On the other hand, China, the world’s top copper consumer, saw January’s imports fall off by 14.7% from December’s all-time record, according to official customs data.
And imports may continue to ease as Chinese smelters ramp up production after problems in the past couple of months and domestic supply increases, putting pressure on metals markets in Shanghai and London. Chinese smelters slowed production in the past two months due to increased stocks of sulphuric acid, a by-product of copper smelting, says Shi Lin, an analyst at UK-based consultantcy CRU in Beijing.
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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.