Base Metals Rally
Mar 11th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were awash with green on Tuesday. Copper slumbered during most of the pre-dawn hours, then rallied through the New York morning, easing late to finish at $1.6637/lb., up 4 cents.
Nickel also moved sharply higher in New York before a late day slump led to a close at $4.3787/lb., up 6¾ cents. Zinc was up straight through with a slight dropoff at the end, to $0.5552/lb., up a penny and three-quarters. Aluminum pushed steadily higher for most of the day, tacking on a penny and three-quarters, to $0.5815/lb., while lead also had a good day, adding a penny and two-thirds, to $0.5733/lb.
Copper led the sector higher on speculation that import data from China will come in strong.
China will release copper trade data today, and it is widely projected to report an increase from 232,700 metric tons in January. The metal jumped 9.8% last week on expectations that China’s economy will rebound. That’s supportive on the demand side, as is the 6.6% decline in LME stocks over the past two weeks.
That dropoff continued yesterday, as inventories monitored by the LME fell 6,675 metric tons, to 512,025 tons.
“Governmental infrastructure projects and China imports are very supportive for medium- to long-term copper prices,” wrote Bayram Dincer, a commodity analyst at Dresdner Bank in Zurich.
China’s copper buys represent “a strategic intention for their longer-term plans as opposed to just a temporary support for the market,” said Catherine Virga, senior base metals analyst with CPM Group in New York.
They may well need to boost imports, as refined copper output is likely to fall 90,000 metric tons in the first quarter of 2009 vs. 1Q08, due to a shortage of scrap.
Metalease, a Shanghai-based nonferrous metals information provider, said that lack of copper scrap resulted in a loss of 30,000 metric tons of refined copper output in both January and February, or 8% of china’s average monthly copper output in 2008.
In company news, Zambia has asked Glencore to surrender to the government two copper mines that Glencore planned to shut down due to unprofitability. The minister of mines and minerals said the government would not accept the closure of the Mufulira and Nkana mines, and is prepared to take control.
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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.