Industrial Metals Pounded
Sep 17th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were all in the red on Tuesday. Copper bottomed at $3.07 around mid-morning and, though it rallied from there, failed to reach break-even, finishing at $3.1126/lb., down 4½ cents.
Nickel sank below $8 in the pre-dawn hours, then traded within a 20-cent range through the day, closing at the low end at $7.8781/lb., down nearly 33 cents. Zinc had a pair of very sharp ups and downs, ending at $0.7705/lb., down a penny and three-quarters. Aluminum was weak, shedding nearly 2 cents to $1.1253/lb., while lead dropped below 80 cents in the pre-dawn hours before squeaking back over the mark to $0.8068/lb., down more than 2 cents.
It was another dismal day for the industrial metals, with copper leading the sector lower as the ongoing turmoil in financial markets gave traders the dreads about the slowing worldwide economy.
Commodities in general continue to be shunned. The Standard & Poor’s GSCI Index of 24 commodities fell as much as 4.4% yesterday, effectively wiping out this year’s gains. This year has now become the most volatile for raw materials since 1973, with the GSCI tumbling 34% from its record high reached on July 3.
“There are worries of a global slowdown brought on by tightening credit conditions around the world,” said Evan Smith, of U.S. Global Investors in San Antonio. “If we see global growth drop, it’s definitely going to have an impact on commodity demand.”
Not a very tough call there.
Meanwhile, leading Japanese smelter Sumitomo Metal Mining Co. (TYO) said it expects a global surplus in nickel this year of 26,000 metric tons. “The outlook for a recovery in stainless steel demand is rather opaque, and it might be difficult to expect it to happen this year,” a company spokesman said.
The surplus is projected even in the face of falling supplies. BHP Billiton’s (BHP) four-month shutdown of its Kalgoorlie smelter in Australia removed about 20,000 tons of output, and China’s top producer, Jinchuan Group, has cut its annual production target by 10,000 to 20,000 tons.
Source: Industrial metals pounded - Nickel surplus expected despite falling output.
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