Base Metals Little Changed
Dec 18th, 2008 | By Doug Casey | Category: Financial NewsThe base metals were all slightly higher on Wednesday. Copper fell from the pre-dawn hours to just after the New York open, after which it rose to just past the break-even point, finishing at $1.3679/lb., up a quarter-cent.
Nickel advanced from the pre-dawn hours to noon, then fell off into a close at $4.3643/lb., up 11 1/3 cents. Zinc had a steep drop into the New York open, followed by an equally steep uptrend, ending at $0.4841/lb., up a half-cent. Aluminum had an up day, adding a penny, to $0.6641/lb., while lead was also in positive territory, gaining a half-cent, to $0.4427/lb.
Copper languished near a four-year low in scanty trading, as new data reinforced perception of a global slowdown. Copper supplies outpaced demand by 30,600 metric tons in the first 10 months of the year, the World Bureau of Metal Statistics said yesterday.
“There is no doubt that the outlook for metals demand over the next few quarters is grim,” wrote analysts at Barclays Capital. “Copper is the metal we would identify as having the furthest downside potential from current levels.”
Considering that copper is already down 55% on the year, that’s a mighty grim forecast indeed.
Compounding the gloom is the ongoing stockpile glut. Inventories monitored by the LME shot up by another 3,275 metric tons yesterday, to 321,900 tons, and are now up by 63% in 2008.
And it will only get worse in 2009, the Barclays analysts wrote. They projected that copper demand will lag behind production next year to the tune of a surplus of 144,000 tons of metal. That’s in stark contrast to this year’s estimated shortfall of 60,000 tons.
In company news, Anglo American (NASDAQ:AAUK) announced it is cutting planned investment by more than half as lower prices won’t support its $45 billion expansion program. Anglo joins Rio Tinto (NYSE:RTP) and Freeport-McMoRan (NYSE:FCX), in taking steps to reduce output and trim expansion..
Yet not everyone sees only dark clouds. Bernd Drouven, CEO of Norddeutsche Affinerie, Europe’s largest copper refinery, said yesterday that he expects relatively stable 2009 copper demand, although it will be lower overall than in 2008. He expressed optimism about China, as well as Eastern Europe, where large infrastructure improvement programs are underway.
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.