Base Metals Soar
Jun 12th, 2009 | By Doug Casey | Category: Gold MarketThe base metals were awash in green on Thursday. Copper was sharply higher from the late pre-dawn hours to about noon, touching $2.44, then fell off a bit to finish at $2.4098/lb., up almost 9 cents. Nickel also made a strong upmove, ending at $7.1146/lb., up 37 cents. Zinc took a big hit in late morning but then gained it all back, closing at its intraday high of $0.7644/lb., up 4 1/3 cents. Aluminum had a good day, tacking on 2¼ cents, to $0.7493/lb., while lead roared higher, adding nearly 4 cents, to $0.8073/lb.
Copper notched an 8-month high, leading the other industrial metals on a rampage, as the dollar’s decline provided support, along with more positive data out of China.
Chinese copper imports climbed for a fourth month in a row to a record in May. Imports were up 6% from April, to 422,666 metric tons, the Beijing-based customs office said. That confounded analysts, who had been predicting a decline to a level above 300,000 tons.
“We were caught by surprise,” said Edward Fang, an analyst from China International Futures (Shanghai) Co. “We assume these shipments were from arbitrage trading earlier this year, as the arbitrage has already turned bad.”
The premium of Shanghai copper over London prices fell to around $600/ton at the end of May, down from a high of around $1,293 on April 13.
In addition, customs data showed China’s scrap imports down 17% in May from a month earlier, and off 39% from a year ago. “We heard customs in the Guangdong area recently started its annual crackdown on scrap metals smuggling,” Chen Yisheng, a Minmetals Starfutures analyst, said. “It should tighten scrap supplies in the next couple of months.”
And stockpiles prolonged their fall, with copper inventories monitored by the LME down 1,100 metric tons yesterday, to 293,175 tons.
Freeport-McMoRan Copper & Gold CEO Richard Adkerson commented on the situation, saying that, “Global copper inventories are still low and although metal prices are rising, there is not yet enough demand to increase production.”
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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.