Base Metals Savaged Again, but Aluminum Hanging In
Oct 9th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals nearly all took a thrashing on Wednesday. Copper peaked at the New York open, but sagged with only a couple of feeble rallies through the day, finishing at $2.4025/lb., down 19½ cents. Nickel was crushed, falling below the $6 mark around mid-morning and failing to re-take the level, closing at $5.8173/lb., down 60 cents.
Zinc was also off from the NY open onward, just coming off its intraday low to end at $0.6465/lb., down 4 1/3 cents. Aluminum held up remarkably well all day, actually gaining nearly a quarter-cent, to $1.0151/lb., while lead continued its long decline, dropping nearly 2½ cents, to $0.7087/lb.
Copper skidded to its lowest price since March of 2006, on the widespread conviction that even with the coordinated reduction in interest rates in the U.S. and Europe, there will be no jump start to either investor confidence or world economic growth.
“The market is saying this action is not enough,” in the opinion of Frank McGhee, of Integrated Brokerage Services in Chicago. “The best the central banks can do to turn the tide is turn confidence, and they haven’t been able to do that. Copper will continue to get punished in view of the continued, deteriorating global economic outlook.”
Leon Westgate, an analyst at Standard Bank, concurred, saying that the “coordinated action is positive but it doesn’t really impact on the immediate demand outlook for base metals … After the initial euphoria there is still concern…”
Adding to the gloom, the International Copper Study Group forecast a copper surplus of 109,000 metric tons in 2008.
That’s a difficult situation that promises to get worse. Supplies of the metal will exceed demand by 277,000 metric tons next year, the ICSG said. That’s based on a projection that mine production will gain almost 11% next year even as usage slows, increasing by only 3.4%. Meanwhile, the global nickel market will be in a 110,000 ton surplus in 2009, the ICSG predicted.
All of this makes aluminum’s steadiness a bit surprising, especially considering that inventories of the metal monitored by the LME stand at more than 1.39 million tons, the highest level since February 2004.
Source: Most base metals savaged again - But aluminum hanging in.
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