Base Metals Up On Optimism
Jul 18th, 2008 | By Doug Casey | Category: Gold MarketThe base metals were mostly in positive territory on Thursday. Copper was flat until the New York open, then climbed higher through the morning, before easing to a finish at $3.787/lb., up more than 3 cents.
Nickel was tightly rangebound throughout the day, ranging between $9.20 and $9.40 before settling at $9.2797/lb., up 3 cents. Zinc traded very erratically, but with a slight uptrend, ending at $0.8244/lb., up a penny and a half. Aluminum was little changed, giving up three-quarters of a cent, to $1.3812/lb., while lead staged a modest rally, adding a penny and a third, to $0.8944/lb.
Copper led most of the industrial metals higher on Thursday, as the general doom and gloom gave way to a spurt of optimism.
“Housing starts up 9 percent show a nice pick-up” in construction demand, said John Gross, publisher of the Copper Journal,
That’s bullish for copper since builders are the number one users. “People should be keeping their eye on the building and construction sector, as things could start turning around there,” said Gross.
The metal also benefited from technical buying.
And there are supply issues. Support for copper prices is “mostly coming from supply problems,” in the opinion of Michael Widmer, an analyst at Lehman Brothers (NYSE:LEH).
However, “Despite the positive tone, copper and other base metals will likely face further selling pressures as investors de-risk portfolios amid an uncertain economic environment,” said Bart Melek, of BMO Nesbitt Burns.
Regarding nickel, “The only evidence we see of a rebound is steady outflows of LME stocks,” said Randy North, of RBC Capital Markets in London. “Our contacts in the physical markets tell us that consumer activity is healthy. However, material is easy to come by.”
And Citigroup (NYSE:C) analysts predicted that production of aluminum may decline 2 million tons, or 5 percent of annual output, this year, because of “power supply problems.” Prices will average $2 a pound in 2009 and “rise further in 2010,” they wrote.
Source: Base Metals Up On Optimism
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