Base Metals Sink – But Aluminum Looks Strong Going Forward
Jun 24th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were all in the red on Monday. Copper followed the precious metals down, falling off a cliff at the New York open, then trading sideways after the first hour and finishing at $3.8443/lb., down 5¼ cents from Friday. Nickel was the same, closing at its intraday low of $9.7628/lb., down more than 33 cents.
Zinc ditto although it rallied slightly after the selloff to end at $0.8494/lb., down just under a penny. Aluminum wasn’t hit as hard as the others, losing only two-tenths of a cent, to $1.3939/lb., while lead was off a bit less than a cent, to $0.8232/lb.
Copper was slammed down after touching a 5-week high in London trading.
Part of the problem is a perception that Chinese demand may be slowing for real. China’s copper imports have fallen by 22.3% in the first five months of the year, to 611,306 tons, according to customs data released yesterday.
Despite the setback, copper remains within striking distance of its alltime highs, as the weak dollar encourages foreign purchases. “Considering the equity market is in doom mode, this is a noteworthy performance and looks as though new highs may be set before too long in the leading metals,” said analyst William Adams at Basemetals.com.
Meanwhile, aluminum touched a three-month high, and has appreciated 25% since the beginning of the year.
“Aluminium prices have strengthened quite perceptibly, both on concerns about short-term power shortages, and in the long term on the economics of the industry with rising oil prices,” said John Kemp, of RBS Sempra Metals.
”Copper may struggle to make fresh highs, but aluminium is very likely to [reach them]. The near term trigger could be supply problems in China, which will underscore how fragile the power system is there.”
Supply disruptions in India, Brazil, Australia and the United States have also helped support aluminum. “In total we estimate one-million tonnes (2 percent) of production has been lost this year due directly or indirectly to power supply problems,” Citigroup Global Markets analysts wrote.
Source: Base Metals Sink – But Aluminum Looks Strong Going Forward
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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.