Nickel Continues Strong Upmove, but Zinc seen Struggling on Supply Excess
Aug 21st, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed on Wednesday. Copper rose until just before the noon hour, cresting above $3.51, then hit a sudden vicious selloff that plunged it into negative territory, finishing at $3.4293/lb., down nearly 4½ cents.
Nickel was up strongly in the pre-dawn hours, then held up well through New York trading, closing at $8.9214/lb., up almost 26½ cents. Zinc traded choppily and came well off its highs, but ended with a gain at $0.7744/lb. up two-thirds of a cent. Aluminum was off in the pre-dawn hours, rallied through the late morning, but then sank again, eventually shedding a bit more than a penny to $1.2273/lb., while lead hit a late morning downdraught that took it to $0.8082/lb., down three-quarters of a cent.
Copper declined despite hints that China will start buying again. China’s manufacturers, the world’s largest copper consumers, may increase imports by 60%, said Frank Zhou, deputy manager of the copper division of Bayin Resources Co. in Shanghai.
Imports could jump to between 100,000 metric tons and 120,000 tons a month, from 75,707 tons in June, Zhou said. The June figure was well below the monthly average of 114,502 tons in the first half.
“Watch out for a sharp pick-up in demand” from China, wrote Alex Heath, of RBC Capital Markets in London. “If we are right, then the fourth quarter could very well see continued recoveries in price for the likes of copper.”
But that anticipation wasn’t enough to counter the reversal in crude prices after the inventory report, and the strength in the dollar.
Meanwhile, zinc was held back on concerns that supply will outpace demand for a second consecutive year. The zinc surplus widened in the first half of this year to 72,000 metric tons, vs. a year ago, according to the International Lead and Zinc Study Group.
“Zinc is struggling to hold on to any gains it’s made because supply fundamentals don’t support a rally,” said Gayle Berry, of Barclays Capital in London. “We have not seen much supply response from zinc producers.”
Barclays estimates that zinc production will exceed demand by 95,000 tons this quarter.
Source: Nickel Continues Strong Upmove, but Zinc seen Struggling on Supply Excess
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