Base Metals Stuck
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The base metals were mixed on Friday. Copper was flat until the late morning, then shot upward, peaking around noon before flattening out after that to finish at $3.6656/lb., up 5 cents.
Nickel’s multi-day run ended abruptly, as it sank from its pre-dawn high to close just off of its intraday low at $10.8378/lb., down 25 cents. Zinc had a day of violent ups and downs to little effect, as it ended at $0.8386/lb., up a quarter of a penny. Aluminum was also little changed, shedding a quarter of a cent, to $1.3122/lb., while lead’s freefall still showed no sign of ending as it dropped another 2 2/3 cents, to $0.7966/lb.
Copper benefited from some optimism generated by the unexpectedly strong US retail sales reported a day earlier.
“With some positive economic data and some bullish insight into China’s likely demand following the tragic earthquake, plus disruptions in metal supply, the fundamentals seem tighter if anything,” said BaseMetals.Com analyst William Adams. “Indeed with lead and zinc now down heavily from their earlier trading levels some value does seem to be in these metals, as has been seen in nickel.”
Adams added that, “We would not be surprised if these lower prices attract a mixture of bargain hunting and restocking.”
Nickel prices retreated from a three-week high after the market reconsidered the potential for supply disruption because of BHP’s closure of an Australian smelter.
BHP reported it was hoping to export more nickel concentrates to other processing plants over the next four months, and that was enough to dampened interest. “Taking into account shipping delays, there will be a modest loss. Output will ultimately be pushed back from 2008 to 2009,” said David Thurtell, analyst at BNP Paribas.
“I suspect that with recent softness in demand … There will be plenty of spare refining capacity to take BHP’s material, but it depends on port capacity,” Thurtell added.
Meanwhile, lead’s extraordinary freefall, which has now driven the metal to a 16-month low, continued as stocks rose. Inventories monitored by the LME have grown by 70%, to 79,300 metric tons, since early March.
Some are beginning to question whether the selloff has been overdone.
“We expect prices to rebound to an average of $2,950/t in (the third quarter of 2008) on the expectation of a strong pick up in Chinese buying over the summer,” Barclays Capital analysts wrote. Lead closed at $1,775/t yesterday, a 54% plunge since its record high in October, 2007.
Source: Base Metals Stuck
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Tags: aluminum, Barclays Capital, Base Metals, BHP, Bnp Paribas, china, copper, gold, Lme, nickel, resources, Ups, ZincAbout the Author
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.