Base Metals Tank Again
May 23rd, 2008 | By Doug Casey | Category: Gold MarketThe base metals took a severe beating on Thursday. Copper was down from the pre-dawn hours straight through the day, only coming off its lows near the noon hour and finishing at $3.497/lb., down 6 cents.
Nickel’s woes continued in spades as it struggled to hold the $11 level before giving it up at mid-morning and sliding to a close at $10.5793/lb., down more than 64 cents. Zinc also barely came off its intraday low to end at $0.9503/lb., down more than 3¾ cents. Aluminum showed strength early before it too succumbed to selling that dropped it to $1.3308/lb., down a penny and a quarter, while lead fell precipitously to an intraday low of $0.9139/lb., down almost 5½ cents.
No doubt about it, after yesterday’s selloff it’s clear that traders’ appetite for the industrial metals has all but completely dried up.
The decline was general, as the UBS Bloomberg Constant Maturity Commodity index slumped 0.9, with oil, gold, and coffee all slipping on concern the economy in the U.S. won’t recover anytime soon, slicing into demand.
In terms of copper imports, “April is generally the biggest import month of the year for China,” said Daniel Hynes, an analyst at Merrill Lynch & Co. in London. And although they did rise 1.2% from March to April, the Beijing-based customs office said, shipments declined 31% from the year-earlier period.
Looking for a bright spot, Lehman Brothers analyst Michael Widmer said that, “Imports were lower year-on-year because there was more restocking last year than this, but imports have risen month-on-month … while some market participants expected them to fall.”
Meanwhile, nickel skidded to a two-year low, as it has been in a surplus for the 13 months through March, according to the International Nickel Study Group.
More of the same may be coming. Natixis Commodity Markets predicts that production will outpace demand for a second consecutive year in 2008. Output will increase with today’s opening of BHP Billiton’s Ravensthorpe mine in Western Australia tomorrow. It will produce about 45,000 tons a year, making it the biggest new mine since Voisey’s Bay commenced operations in 2005.
And in company news, Namibia’s biggest zinc producer, Skorpion Zinc declared its Rosh Pinah mine has been in lock-out since Wednesday, following a strike that began May 10. The company declined to comment on the effect of the strike on the mine’s output.
Source: Base Metals Tank Again
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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.