Base Metals Still Floundering
May 28th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mostly in the red on Tuesday. Copper tumbled during the early part of the New York session, but rallied strongly from there to regain most of the lost ground and finish at $3.7999/lb., down a penny from Friday.
Nickel succumbed to selling after Friday’s rally, but came off its early lows to close at $10.7002/lb., down a bit more than 30 cents. Zinc was in a downtrend most of the day, ending at $0.9654/lb., down more than a penny. Aluminum was up in the pre-dawn hours but gave it all back, shedding a half-cent, to end at $1.3408/lb., while lead bucked the trend, tacking on nearly a penny, to $0.912/lb.
Copper more or less held its ground on falling stockpiles. Inventories monitored by the LME lost 975 metric tons yesterday, to 124,400 tons.
The others were mostly off, leading BaseMetals.com analyst William Adams to comment that, “After the weakness seen last week, the metals are well positioned to see some bargain hunting, but much will depend on how confident the market is.”
Well, isn’t that always the case?
Meanwhile, nickel took the biggest hit in the group. “Nickel prices are likely to continue to trade heavily over the medium to long term,” said JP Morgan analyst Michael Jansen. “This reflects two major price drivers — ongoing substitution towards nickel in pig iron in China (at the expense of cathode) and an acceleration in western world mine supply.”
With a host of new mines expected to come on line in the next few years, the increase in nickel supply from 2010 onwards could be “quite spectacular,” Jansen said.
“We now anticipate that the nickel supply/demand balance will be a significant surplus for 2008 into 2010 at least, and quite possibly for a year or two afterwards,” he concluded.
In company news, the Indonesian unit of Rio Tinto has sued a regional government in Central Sulawesi for issuing a mining permit to local firms while it is still negotiating with the government over the area.
Rio is in negotiation with central and regional governments to obtain a permit to exploit the La Sampala nickel deposit in Central Sulawesi.
And Nautilus Minerals has started a new collaborative exploration program in association with the Australian National University and Teck Cominco, to search for new seafloor massive sulphide systems in the waters off Tonga.
Source: Base Metals Still Floundering
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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.