Base Metals Move Up
Feb 4th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were all in positive territory on Tuesday. Copper was steady through the pre-dawn hours and moved steadily higher through the New York day, just coming off its intraday highs late to finish at $1.5018/lb., up more than 7½ cents.
Nickel bottomed at the New York open and was all up from there, closing at its intraday high of $5.1914/lb., up more than 17 1/3 cents. Zinc followed copper’s path closely, ending at $0.5164/lb., up nearly 2½ cents. Aluminum had a modestly good day, adding almost a half-cent to $0.6114/lb., while lead also found the green at $0.5199/lb., up just short of 2 cents.
Copper helped spur the sector higher on Tuesday, as the housing numbers furnished traders with something to hang an optimistic hat on.
Cautiously, analyst David Thurtell, of Citigroup (NYSE:C) in London, ventured the opinion that, “If the bottom has indeed been seen in the U.S. industrial production cycle, copper may well have seen its low.”
On the stockpile front, however, Monday’s modest decline was a one and only, as copper inventories monitored by the LME rose again, adding 4,100 metric tons yesterday, to 495,300 tons.
Also factoring in was the sliding dollar.
And Michael Widmer, of BNP Paribas, said that, “We see people covering their short positions … [The] data triggered some short covering, but I don’t see a build up of new long positions.”
However, (NYSE:GS) Goldman Sachs’ London-based analyst Peter Mallin-Jones was more aggressive, writing that, “We would advocate building copper exposure as we believe it will be the first metal to see prices rise should demand stabilize and then pick up.”
Goldman’s estimate is that copper inventories this year will be only 48% of the average for the past 10 years, compared with more than twice the 10-year average for aluminum, nickel and zinc, Mallin-Jones wrote.
But nickel is still mired in difficulty. Ningbo Sunhu Chemical Products, China’s biggest nickel trader, said its sales since the New Year holiday last week slumped badly, as 90% of its customers remained closed because of a lack of demand. Sales are off 95% from the same period last year, Ningbo said.
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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.