Base Metals Stagnant
Jan 6th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were mostly in the red on Monday. Copper sank during the pre-dawn hours, but rallied through most of the New York session before slipping a little late in the day to finish at $1.4251/lb., down less than a quarter-cent.
Nickel pulled back a bit after last week’s charge, closing at $5.6283/lb., down 11 1/3 cents. Zinc was up and down, with a final late upthrust taking it to $0.5651/lb., up nearly a half-cent. Aluminum was off during the pre-dawn hours but rallied back the rest of the day to end at $0.6854/lb., down three-quarters of a cent, while lead regained most of its early lost ground, but still shed better than a half-cent, to $0.499/lb.
It was a desultory day for the industrial metals. Reuters summed up: “U.S. copper futures ended with marginal losses on Monday, after an overnight test of both ends of the trading range held, leaving prices in a mostly sideways drift for the remainder of the session.”
Although there was a bout of short-covering, any potential sustained rally was snuffed by news of stockpiles that continue their inexorable rise. Copper inventories monitored by the LME gained another 1500 metric tons yesterday, to 342,050 tons, raising them to the highest level since February 6, 2004.
Aluminum stocks kept pace, as well. Yesterday, LME inventories of that metal soared by 6,925 metric tons, to 2.34 million, the most since way back on September 23, 1994.
John Gross, publisher of the Copper Journal, injected a modestly optimistic view into the discussion. While conceding that “year-end book squaring, and commodity index re-weightings [are] all contributing to copper’s steadier tone in the new year,” Gross also cited what are in his opinion “severely oversold market conditions.”
But a big turnaround is unlikely, says Kevin Tuohy, of MF Global (NYSE:MF) in London. “People are still in a state of flux not knowing what their order books will be,” Tuohy said. “I can’t see money flowing in at this point. It’s too early.”
China also weighed in yesterday, with the Ministry of Commerce saying that it will allow tax-free imports of copper, nickel and cobalt concentrate, beginning February 1, provided that the finished products are re-exported.
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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.