Base Metals Retreat Further
May 15th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were nearly all in the red on Wednesday. Copper tumbled from the pre-dawn hours until about mid-morning, then traded with a slight upward bias to finish at $3.7215/lb., down more than 6¾ cents.
Nickel fell until the New York open, dropping below $12, rallied back, but then declined again, closing at $11.9896/lb., down 20 cents. Zinc pushed past $1.05 in the pre-dawn hours but couldn’t hold its gains and wound up losing a penny and a third, at $1.0242/lb. Aluminum fell in the pre-dawn hours but rallied back during the day to $1.31/lb., unchanged, while lead’s rebound got derailed as it shed 2½ cents, to $1.015/lb.
Copper continued to decline, dropping to a seven-week low as commodities show weakness in the face of a firming dollar that makes the metals more expensive for those holding other currencies.
“The dollar is stronger today, taking its toll on precious and base metals,” said MF Global analyst Edward Meir. “Chinese production data for the various metals for the month of April were released earlier — these show solid month-over-month and year-to-date gains.”
Data released by China’s National Bureau of Statistics showed output of refined copper rose 22.7% in April, to 329,400 metric tons, but analysts are concerned about slowing industrial growth in that country.
“The growth picture looks much worse now, with higher energy prices and a slowdown in manufacturing,” said Michael Smith, president at T&K Futures & Options in Port St. Lucie, Florida. Thus, it’s likely that, “Copper will keep dropping,” he said.
Zinc eased yesterday after Tuesday’s runup based on estimates that suggest up to 500,000 metric tons of smelter capacity could be lost to the recent massive earthquake.
“Prices may be supported by the disruptions, but damages would have to be very serious — which doesn’t seem to be the case — to cause a sustained impact on metals quotations,” said Lehman Brothers analyst Michael Widmer.
In company news, shares of BHP Billiton surged to a record high yesterday, as rumours swirled that a state-controlled Chinese firm was building a stake in the world’s biggest mining company.
Speculation is centering on Chinese aluminum maker Chinalco, already the largest shareholder in Rio Tinto, which BHP is seeking to acquire. China’s massive appetite for raw materials has it buying into sources of supply around the globe.
Source: Base Metals Retreat Further
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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.