Copper Benefits from Speculators
Apr 12th, 2008 | By Doug Casey | Category: Gold MarketAluminum demand seen exceeding supply. The base metals were mixed on Friday. Copper rebounded from Thursday’s beating, pushing back over $4, but couldn’t hold there as it slipped in later trading to finish at $3.9797/lb., up 2 2/3 cents. Nickel spent some time above the $13 mark but declined from mid-morning on, closing at $12.7822/lb., down nearly 21½ cents. Zinc prolonged its slump, ending at $1.0321/lb., down more than a penny. Aluminum traded jaggedly but wound up adding more than a third of a cent to $1.3713/lb., while lead soared in the pre-dawn hours and then traded sideways, tacking on nearly 3½ cents, to $1.3266/lb.
Copper got a boost from the weaker dollar, as traders scurried for a hedge against inflation.
“There’s a lot of speculative money out there that’s looking for a home, and it’s just been pouring into copper,” said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “This market just doesn’t look like it wants to stop.”
Falling stockpiles also supported copper. Inventories monitored by the LME declined by 950 metric tons yesterday, to 115,150 tons, the lowest level in nine months and equal to only 2.5 days of global demand.
Concurrently, inventories monitored by the Shanghai Futures Exchange rose modestly by 695 metric tons in the week ending April 10, but import data revealed that China’s March copper imports rose 6 percent.
Predicting future market direction in the short terms is liable to be tricky. “At these high levels, increased volatility is to be expected and as such bouts of consolidation are likely,” BaseMetals.Com analyst William Adams said.
Meanwhile, the China Industry Research and Investment Analysis report, from researchandmarkets.com said that “Aluminum price is rising because of a supply shortage. High demand growth for primary alumina in China will be a key support for prices going forward.
“The supply is tight and the demand is higher than ever. China is the world’s largest aluminum producer but there is a scarcity because of snowstorms in China in 2008. On the demand side, China has become the world’s largest aluminum products maker and consumer. Chinese demand this year will be about 14.9 million tons, a 24 percent rise from 2007. The country will account for 35% of total demand by 2020 from 13% in 2000.”
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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.