Base Metals Mixed Again
Apr 23rd, 2009 | By Doug Casey | Category: Financial NewsThe base metals were mixed again on Wednesday. Copper was down in the pre-dawn hours, falling below $1.99, but pulled itself back over the $2 mark as the day wore on, and finished at $2.0133/lb., down 2 cents.
Nickel was also down early, rallied during the New York morning, but fell off again late to close at $5.146/lb., down 5½ cents. Zinc followed a similar path, ending at $0.6443/lb., down a half-cent. Aluminum did make it back into positive territory, adding just short of a penny, to $0.6452/lb., while lead was little changed, adding less than a quarter-cent, to $0.6674/lb.
Copper tried to fight its way back to green numbers, but wound up with the biggest cumulative 3-day loss since January, as Wall Street’s very choppy day set the stage for wild swings in the industrial metals and, ultimately, recession fears prevailed.
Patrick Chidley, an analyst at Barnard Jacobs Mellet in Stamford, Connecticut, put it simply: “The major reason that copper is falling is that people are just worried about the economy.”
Also factoring in was a report released yesterday by the International Copper Study Group which foresaw a global surplus of refined copper that will widen through at least 2010 as use drops “significantly.”
World copper use will fall by at least 4.3% this year, led by declines averaging 14% percent in the U.S., Europe and Japan, the ICSG said. However, in China, the group predicts that demand will rise 3%.
Recent Chinese data has been very bullish. Imports of refined copper by the world’s largest consumer—at about 30% of global demand—rose to a record high of 296,843 metric tons of refined copper in March. That’s an increase of 137.6%, year over year.
And the ongoing stockpile drawdown continued. Copper inventories monitored by the LME plunged again yesterday, falling by 7,200 metric tons to 450,100 tons. That’s a three-month low, and a decline of more than 20% since February.
In company news, Freeport McMoRan (NYSE:FCX) reported that first quarter profit dropped more than 90%. There have been “very weak market conditions in the U.S. and the rest of the developed world” for copper use, Freeport CEO Richard Adkerson said.
But while Adkerson sees “volatility in the near term” for prices, he expressed confidence that in the long term, “the world is going to have strong demand” as emerging economies build infrastructure and expand.
Source: Base Metals Mixed Again
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