Base Metals Show Strength
Aug 20th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were all in positive territory on Tuesday. Copper noodled around unchanged until mid-morning, when it took off and climbed steeply, then held to finish just off its intraday high at $3.4736/lb., up nearly 10½ cents.
Nickel was up in the pre-dawn hours, but took off most sharply higher at the same mid-morning point, closing at $8.6553/lb., up almost 52½ cents. Zinc had a rollercoaster day of sudden ups and downs, but ended higher at $0.7679/lb. up nearly a penny and a quarter. Aluminum was down in the pre-dawn hours but regained the black during the morning, tacking on better than a penny to $1.2387/lb., while lead forged a very nice day, adding 4½ cents, to $0.8168/lb.
Copper shoved its way to a two-week high after the decline in the dollar provoked a spate of short-covering, analysts said.
There was also apparently some momentum generated when automatic stop-buy orders were triggered by the push through $3.40.
Supply concerns factored in, as well. Citigroup (NYSE:C) wrote that copper will advance through 2010 as mine shortfalls and diminished production crimp output. BHP said miners will continue to face “serious challenges on the supply side” on Monday.
“Things like equipment stress, industrial action and wage disputes, labor and equipment shortages, inflationary pressures and then infrastructural problems” will continue to limit mine production, BHP CEO Marius Kloppers said.
Thus, “We expect a recovery in copper prices primarily based on lower than expected supplies,” said Joel Crane, of Deutsche Bank AG (NYSE:DB) in New York. “Supply is weaker than demand.”
Nickel soared after Xstrata (LON:XTA), the world’s fourth- largest producer of the metal, suspended production at its Falcondo operations in the Dominican Republic, citing rising production costs and lower metal prices. Falcondo could be down fourth months, Xstrata said.
Other nickel producers have delayed new projects and cut output as nickel prices’ slid to near their production cost, curbing profits.
Source: Base Metals Show Strength
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