Base Metals Listless
Mar 16th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were little changed on Friday. Copper bottomed in the late pre-dawn hours, pushed higher from there to mid-morning, then eased into a finish at $1.6449/lb., up 2 1/3 cents.
Nickel had a series of $4.31 peaks into the New York morning, but then slid for the rest of the day, closing at $4.257/lb., up just over a penny and a half. Zinc fell from its mid-morning highs and wound up at its intraday low of $0.5356/lb., down a half-cent. Aluminum had a slight gain, adding less than two-tenths of a cent, to $0.5951/lb., while lead was also modestly higher, tacking on just under a half-cent, to $0.561/lb.
Copper clung to its gains for the day, as a reversal of formerly-burgeoning stockpiles suggested that demand could have seen its lows.
Inventories monitored by the LME fell 6,700 metric tons yesterday, dropping below the 500,000 ton mark for the first time in weeks, to 497,625 tons. And in Shanghai, stocks there eased to 34,735 tons from 38,468 tons a week ago.
“Copper prices and inventory have a very high inverse correlation,” said Gijsbert Groenewegen, of Gold Arrow Capital Management in New York. “People really watch the inventories.”
In addition, “There’s some strength coming today from the rhetoric out of China,” said Michael Gross, of OptionSellers.com in Tampa, Florida. “China uses a lot of copper, so any more growth there is going to help demand.”
Gross referred to remarks by Premier Wen Jiabao yesterday. China has “adequate ammunition” to spur the economy and can add to its 4 trillion yuan (US$585 billion) stimulus package at any time, Wen said.
And the Qatar Investment Authority, that country’s $60 billion sovereign wealth fund, said yesterday that it plans to increase investments in commodities after volatility in financial markets subsides. The statement was a “vote of confidence” for raw materials, Barclays Capital analysts.
“Investors seem to have considerable faith in the long- term outlook for commodities,” the Barclays analysts wrote.
And, in the seemingly-endless Oyu Tolgoi negotiations, the national Parliament of Mongolia has concluded its winter session without approving a draft investment agreement for Rio Tinto (NYSE:RTP) and Ivanhoe on the mega-mine.
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