The base metals were all flashing red again on Wednesday. Copper hit the skids in the late pre-dawn hours and fell through to mid-morning, after which it caught some buying, but not enough to return it to break-even as it finished at $1.5409/lb., down 4 1/3 cents.

Nickel declined pretty steadily straight through, closing at its intraday low of $4.0574/lb., down 14¾ cents. Zinc had a series of sharp ups and downs, ending with a loss of over three-quarters of a cent, at $0.5102/lb. Aluminum sagged continuously for a second straight day, settling at its intraday low of $0.7064/lb., down 3½ cents, while lead also plunged to its intraday low of $0.4368/lb., down 4½ cents.

Copper slipped to its lowest level since July 2005 on, no surprise, global economic concerns.

For a change, inventories monitored by the LME were off, but not by much. Stockpiles fell 250 metric tons on Wednesday, to 292,775 tons.

That was insufficient to dispel any of the gloom, which is so heavy that Gijsbert Groenewegen, a fund manager at Gold Arrow Capital Management in New York, could predict that the copper may drop to $1 a pound. The metal “is not going to turn around anytime soon,” Groenewegen said.

Rob Kurzatkowski, futures analyst, optionsXpress (NYSE:OXPS), Chicago, added that, “Copper’s getting its due from the equity markets. (U.S.) manufacturing is at 26 year lows, industrial use is way down. Also, China has really been trying to stimulate their economy which probably indicates that first quarter of next year may be worse that previously thought.”

Also factoring in was an announcement of yet more cutbacks by Freeport McMoRan, the world’s largest publicly-owned producer. Freeport said it will suspend operations and lay off the bulk of its workers at a New Mexico mine. It also cut production estimates through 2010, slashed next year’s capex budget, and will curb other costs as it struggles to cope with plummeting prices.

The layoffs come in addition to about 800 jobs cut last month at its Western copper and molybdenum mines. Freeport also suspended its dividend, and didn’t rule out further cost-cutting steps if economic conditions don’t improve.

In other company news, Brazilian mining giant Vale said yesterday it is laying off 1,300 workers and will put 5,500 more on paid leave. Vale, the world’s largest iron ore producer, faces plunging demand from steel mills.

The layoffs affect 11% of Vale’s work force, and they come as company says it must slash iron ore output by 10% next year.

Source: Base Metals Still In The Slaughterhouse