Base Metals Little Changed
May 19th, 2009 | By Doug Casey | Category: Gold MarketThe base metals were modestly higher on Monday. Copper slogged along below $1.98 until the late pre-dawn hours, but pushed upward from there to finish at its intraday high of $2.0374/lb., up 4 cents.
Nickel was down and then up equally, closing little changed at $5.555/lb., up just over a penny. Zinc followed copper’s path, ending just off its intraday highs at $0.6746/lb., up a penny and two-thirds. Aluminum had a quiet day, shedding a quarter of a cent, to $0.6721/lb., while lead pushed higher, adding just under a penny, to $0.6725/lb.
Copper turned around and bounced back over $2 in New York as it followed booming equities and a weakening dollar higher. With the housing industry crucial to demand for copper, the metal also got a lift when building supplier Lowe’s reporter a smaller-than-expected decline in quarterly profit.
There was also anticipation of more positive news on the home front, with the release of April housing starts data, due out today.
But there were concerns raised by news out of China, which arrived after the close of market on Friday. Copper inventories monitored by the Shanghai Futures Exchange expanded for a third time last week, by 28%, to 35,389 metric tons. That’s the highest level since the week ended March 6.
“What’s weighing on investors now is whether or not Chinese demand will be able to absorb the record imports,” said Zeng Chao, of Everbright Futures Co.
Chinese copper imports reached a record 399,833 tons last month, despite the country experiencing a widening export slump that pushed industrial output lower than expected. “With record imports and rising domestic stockpiles, we see cash prices start to fall and this is weighing on the futures market,” said Zeng.
China also factored into the zinc equation, on speculation supply of galvanized sheets may not meet demand from the country’s auto industry. Traders are expecting strong domestic demand for automobiles, said Southwest Futures Co. analyst Jia Zheng, and she added that, “Stockpiles are running low.”
Meanwhile, the copper stock drawdown continues. Copper inventories monitored by the LME were off 4,250 metric tons yesterday, to 353,550 tons, the lowest level since early January.
Source: Base Metals Little Changed
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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.