Base Metals Treading Water
Sep 5th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed on Thursday. Copper held in positive territory until mid-morning in New York, but then hit the skids, finishing just off its intraday low at $3.3037/lb., down 4¾ cents.
Nickel pushed almost back to the $9 mark in early New York trading, but tumbled along with copper, closing at its intraday low of $8.6485/lb., down 11½ cents. Zinc moved up and, tho it hit the morning selloff, managed to end in the black at $0.8055/lb., up more than a penny. Aluminum was up and down sharply a couple of times, to little effect as it added just a tenth of a cent, to $1.1904/lb., while lead gave up substantial morning gains, shedding a penny and two-thirds, to $0.8617/lb.
Copper was hit by economic concerns as well as persistently high stockpiles. Inventories monitored by the LME now stand at 182,000 metric tons, the highest level since January.
“I think the sentiment still remains pretty vulnerable,” said analyst Sudakshina Unnikrishnan at Barclays Capital. “The concerns still remain on board about how the global economy is developing. Concerns about the slowdown and how that links back to demand are pretty much in place.”
Gerard Burg, an analyst at the National Australia Bank, added that, “There are still grey clouds over the United States and Europe … The trend for metals is down. The global economy is looking softer than in some years and supply is moving into surplus for some of these metals.”
Lead got hammered as the dollar strengthened. Prices had risen as much as 3.8% after the LME reported another 450-ton decline in inventories, to 78,700 metric tons, the lowest level since June 12.
In company news, the UK’s Panel on Takeovers and Mergers has told Xstrata CEO Mick Davis to “put up or shut up” by October 2 on the firm’s pre-conditional offer for platinum group metals producer Lonmin (LMI). Lonmin sought a ruling after Xstrata (XTA) made its hostile offer of ₤33 a share, which Lonmin rejected out of hand, on August 6.
The Panel ruled that, by 5pm on 10/2, Xstrata must either announce a firm intention to make an offer for Lonmin or announce that it does not intend to make an offer. If Xstrata does not commit to making an offer by the deadline, it will effectively be precluded from doing so for the next six months.
Source: Base metals treading water - Still seen as highly vulnerable.
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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.