Industrial Metals In The Tank Again
Jan 9th, 2009 | By Doug Casey | Category: Financial NewsThe base metals were all stuck in the red once again on Thursday. Copper had a day of numerous fits and starts, but mostly fits, as it fell to just off its intraday low at $1.4696/lb., down 4½ cents.
Nickel declined through most of the day, rallying just a bit off its intraday lows late to close at $5.109/lb., down 31½ cents. Zinc was in the green until the noon hour, but then plummeted to its intraday low of $0.5356/lb., down more than a penny and three-quarters. Aluminum was weak, ending at $0.6891/lb., down a penny and a half, while lead was little changed, dropping a third of a cent, to $0.5107/lb.
Copper led the sector lower for the second straight day as hopes for a strengthening economy are firmly on the back burner again.
The metals fell back into weakness “as the market returns its focus to demand-side woes amid a deteriorating macro-economic environment,” wrote analysts at Barclays Capital in London.
The relentless drumbeat of soaring stockpiles picked up its pace yesterday, as copper inventories monitored by the LME surged 6,375 metric tons, to 357,700 tons, their highest level since January 1994.
What passes for optimism was expressed by Malcolm Southwood, of Goldman Sachs (NYSE:GS) JBWere in Melbourne, who forecast that the average price of most metals will be “sharply lower” this year compared with last, with copper averaging $1.89 a pound in 2009. That’s 40% lower than last year’s average of $3.12, but nearly 30% above yesterday’s close.
“Copper has the strongest fundamentals of the major base metals,” Southwood wrote. “With a 12-month view, copper has the best potential for a large price rebound.”
Still, copper production will top demand by 107,000 metric tons this year, Goldman Sachs analysts estimate. That compares with consumption that exceeded output by 117,000 tons last year.
And in company news, Teck Cominco (NYSE:TCK) announced yesterday that it will eliminate 1,400 jobs—roughly 13% of its worldwide workforce—in the face of “persistently weak commodity prices,” with the hope of annual savings of about $85 million.
Source: Industrial Metals In The Tank Again
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