Base Metals Mostly Stabilize
Oct 24th, 2008 | By Doug Casey | Category: Financial NewsThe base metals were mixed on Thursday. Copper went on a wild ride, rising and falling sharply through a 10-cent range before settling little changed at $1.8571/lb., down just a penny.
Nickel fell until mid-morning, before rallying back a little bit to close at $4.2018/lb., down better than 26 1/3 cents. Zinc had a pleasantly good day, rising fairly steadily to finish at $0.5101/lb., up more than 3½ cents. Aluminum also pushed higher, adding more than a penny and three-quarters, to $0.8918/lb., while lead moved up modestly, tacking on less than a penny, to $0.558/lb.
Once again copper failed to gain much traction, although it came well off its lows for the day (and a fresh 3-year low), as fear continues to dominate. The metal is now down 58% since July.
Even producers are getting pessimistic. Copper’s swift and savage fall has ushered in “the end of the supercycle” for the metal, says Jose Pablo Arellano, the executive president of Chile’s Codelco, the world’s biggest copper miner. Arellano expects that the market will remain depressed until the international economic situation begins to show signs of improvement.
Not that the selloff isn’t general. The Reuters/Jefferies CRB Index of 19 commodities yesterday hit its lowest level since February 2004, and the Bloomberg World Mining Index of 162 companies has shed $493 billion in value since the bankruptcy of Lehman Brothers in September.
“As long as we have uncertainty about the overall financial system, this is probably not yet the bottom for base metals,” said Christoph Eibl, of Tiberius Asset Management in Zug, Switzerland. “People just don’t want to own any commodities that have a high correlation to overall economic developments.”
On the supply side, copper inventories monitored by the LME continued to advance, adding 1,500 metric tons to 209,250 tons, while aluminum stockpiles jumped 3,475 tons to 1.5 million tons, their highest level since February 1995
In company news, Canadian miner Teck Cominco (NYSE:TCK) reported that net profit fell a worse-than-expected 13% in the third quarter, primarily because of the price declines in commodities. However, Teck also raised its outlook for 2008 capital spending by 26%, to about C$1.1 billion.
Source: Base Metals Mostly Stabilize
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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.