Base Metals Mixed, Copper Rises as Buck Declines
Oct 8th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed on Tuesday. Copper was up, bottoming at $2.55 in the pre-dawn hours, then moving sharply higher to mid-morning, before falling off again to finish at $2.5976/lb., up 5 cents. Nickel started the day much lower, then traded sideways through a tight range of about 10 cents, closing at $6.4168/lb., down 47¼ cents. Zinc dropped off, ending at $0.6898/lb., down better than 3 cents.
Aluminum moved steadily higher, adding 2 cents, to $1.0129/lb., while lead gave up a lot of its gains after mid-morning, but still managed to tack on more than three-quarters of a cent, to $0.7326/lb.
Copper bounced off its 19-month low as traders tiptoed back in on a weakening dollar and broader rebounds in commodities.
There was also a good bit of “dollar-driven short-covering,” said LaSalle’s Zeman.
But Zeman added that the copper market “will likely have trouble moving considerably higher given the dim economic outlook and lack of supply threats. Prices are likely to remain in a sideways trading pattern, near-term.” Meanwhile, the Fed’s actions buoyed some investor’s spirits.
“There’s some hope that the Fed is going to add some liquidity to these markets and help the credit situation ease a bit,”said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “The credit markets are now unbelievably important for copper, because of the impact it has on the economy.”
On the supply side, inventories monitored by the LME surged 9,600 metric tons yesterday, to 208,350 tons. That marks their highest level since February 2007. However, between 80-90% of stocks are held by one entity.
Still, Barclays Capital (BARC) analysts wrote that “the supply side is extremely problematic,” with output expected to remain “weak well into next year and that does suggest that when demand prospects brighten, there is the potential for a very strong price recovery.”
Source: Base metals mixed - Copper rises as buck declines.
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