Copper Rockets up on Supply Concerns, but Lead Sinks More on Slack Demand
Related Articles
Doug Casey says: ” The Peruvian situation is provoking a lot of worry, even though it has yet to cause major disruptions, as it appears to be worsening. Miners at Peru’s largest copper-zinc pit, Antamina, owned by BHP Billiton, are on strike, but a company official said its effect on production was minimal. “
The base metals were strikingly divergent on Wednesday. Copper was down until mid-morning, but then it was off to the races, as it roared to finish at its intraday high of $4.1046/lb., up more than 11¾ cents. Nickel also rebounded from its mid-morning low, but not enough to reach positive territory as it closed at $9.5459/lb., down 13 2/3 cents. Zinc was well down from its pre-dawn highs, ending at $0.8316/lb., down a penny and three-quarters. Aluminum went ballistic, surging to a new alltime high of $1.4341/lb., up 2 2/3 cents, but lead remained unloved and unwanted, shedding another penny and three-quarters, to $0.7657/lb.
Copper blasted past the key psychological $4 barrier, and landed within kissing distance of its alltime high, as traders responded to the oil crunch, labor unrest in Peru, and factory orders that suggest demand may begin to pick up.
As the $4 mark has been a strong resistance level for so long, breaching it unleashed a torrent of stop/loss orders, as short sellers scrambled to cover their trades.
The Peruvian situation is provoking a lot of worry, even though it has yet to cause major disruptions, as it appears to be worsening.
Miners at Peru’s largest copper-zinc pit, Antamina, owned by BHP Billiton (BHP), are on strike, but a company official said its effect on production was minimal. Southern Copper’s Cuajone mine and Ilo smelter are also struck, but output has been largely unaffected.
However, workers at Freeport McMoRan’s Cerro Verde copper pit, Peru’s third largest, approved plans to strike, pending approval of a second assembly. Other miners are reportedly about to join in, as well.
The possibility of violence is high. The Peruvian government has declared the walkout illegal, and in response miners in hard hats marched defiantly through the streets of Lima yesterday.
Meanwhile, lead fell to a 16-month low as inventories monitored by the LME continued to rise, indicating a building surplus to Michael Widmer, a London analyst with Lehman Brothers. “One important reason is seasonally weak demand,” Widmer said. “The market looks relatively well supplied at the moment.”
And zinc, suffering its biggest intraday loss since mid-June, is facing the same oversupply problem, Widmer said.
Source: Copper Rockets up on Supply Concerns, but Lead Sinks More on Slack Demand
| Email Address: | Subscribe |
NO-SPAM PLEDGE: We will NEVER rent, sell, or give away your e-mail address to anyone for any reason. You can unsubscribe from Casey Research with a few clicks.
Related Articles
Tags: BHP, Cerro Verde, Copper Prices, Doug Casey, investing in Peru, mining stocksAbout the Author
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.