Base Metals Mixed
May 20th, 2009 | By Doug Casey | Category: Gold MarketThe base metals were mixed on Tuesday. Copper was up sharply in the pre-dawn hours, peaking near $2.09 at the New York open and, though it then gave up most of its gains, stayed just in the green to finish at $2.0442/lb., up three-quarters of a cent.
Nickel also took losses during the day but remained upright, closing at $5.6321/lb., up 7¾ cents. Zinc’s swoon took it just under break-even at $0.6739/lb., down less than a tenth of a cent. Aluminum fell to its intraday low of $0.6634/lb., down nearly a penny, while lead also dropped to its intraday low of $0.6648/lb., down three-quarters of a cent.
Copper somehow held in positive territory even as the weak housing data suggested a decreased demand for the metal going forward.
“There is still weakness in the economy and housing that will pressure copper prices,” said Gijsbert Groenewegen, of Gold Arrow Capital Management in New York. “We need to see signs of sustainable demand for copper.”
Stocks may have helped put a floor under it, however. “Copper’s losses were limited in part by the slightly positive tone in equity markets,” said Sterling Smith, of FuturesOne in Chicago.
“Copper is having a hard time finding direction and is trying to find a comfort zone at this point,” said Donald Selkin, of National Securities Corp. in New York. “It’s been following the stock market to a great extent. It’s a mixed picture right now.”
Weighing in on the brighter side was Cochilco, Chile’s state copper commission, which raised its average copper price outlook for this year to $1.75 per lb, from $1.60 previously, due to greater-than-expected Chinese demand for the metal.
“China is the swing factor and everyone is focused on what growth there will look like,” Groenewegen said. “If the copper is being used up for industrial production, then that would be sustainable demand. If it’s just going into stockpiles, then it’s completely artificial and the prices will come down.”
Stockpiles also contributed positively. Copper inventories monitored by the LME were off 4,725 metric tons yesterday, to 348,825 tons, the lowest level since early January.
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