Base Metals Weak, Credit Crisis Doesn’t Bode Well
Sep 18th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed on Wednesday. Copper hit its peak just before the New York open but fell into negative territory from there and never escaped, finishing at $3.0991/lb., down a penny and a third. Nickel had a big dip around mid-morning, but recovered nicely to close at at $7.9122/lb., up nearly 3½ cents.
Zinc was down most of the day and, though it came off its mid-morning lows, still ended at $0.7597/lb., down just over a penny. Aluminum was slowly but steadily lower, shedding nearly a penny and a quarter to $1.1135/lb., while lead eked out a modest gain, adding a bit over a third of a penny, to $0.8106/lb.
Copper declined on a mixed, listless day, as traders took a look at the housing start numbers and decided they were an excellent indication of continued sagging demand going forward.
Today may be a better day, however. Word out of London is that the market there is looking favorably on the AIG bailout.
“The Fed rescue package of AIG is a relief to everyone,” said Kevin Tuohy, a trader at MF Global London. “That is a positive overnight.”
Even as there wasn’t much enthusiasm for the industial metals, though, the commodity sector as a whole showed signs of life. The Standard & Poor’s GSCI Index rose as much as 4.9% yesterday, pushing the gauge back into positive territory for the year after spending one day in the red.
Nickel may be due for a bounce after taking the worst beating of any metal this year. Despite the fact that stainless steel production is weakening, global supply fell 17,200 tons short of demand in the first seven months of the year, according to the World Bureau of Metal Statistics. Stockpiles of the metal in warehouses monitored by the LME stand at only 51,486 tons.
And BHP chairman Don Argus is very optimistic. “While we expect commodity markets to remain volatile in the short term, we are confident that longer-term market fundamentals should support growth in commodity demand.” Argus wrote in BHP’s annual report..
Source: Base metals weak - Credit crisis doesn’t bode well for future demand.
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