Nickel Plummets on Sliding Stainless Demand
Jul 25th, 2008 | By Doug Casey | Category: Financial News, Gold MarketThe base metals were mixed on Wednesday. Copper was off sharply early, but staged a strong rally around mid-morning that nearly got it back to even, finishing at $3.7824/lb., down a penny.
Nickel started down in the late pre-dawn hours and continued south all day, crashing through the $8 level and closing at its intraday low of $8.8813/lb., down more than 30 cents. Zinc followed copper’s track but did much better, pushing back into the black at $0.8535/lb., up 2¾ cents. Aluminum sagged, giving up a penny to $1.34/lb., while lead continued on its rampage, shooting back over the $1 mark to end at its intraday high of $1.0106/lb., up 4 cents.
Copper and aluminum were down modestly on the stronger dollar, but zinc rose the most in a week.
That led Donald Selkin, of National Securities Corp. in New York, to comment that, “If you are investing in copper, you should not keep your eye only on supply and demand, and the labor unrest in South America, but also on the strength of the dollar.”
With a rising dollar, commodities lose some of their appeal to those holding other currencies, and the buck’s advance spurred a market-wide selloff that saw the UBS Bloomberg CMCI index, which tracks 26 commodities, losing 1.4% yesterday.
Copper supply issues are certainly not going away, though. BHP Billiton (NYSE:BHP) said yesterday that output from Chile’s Escondida mine may fall between 10 and 15% in the fiscal year to June 30, 2009, because of lower-quality ores. Escondida is the world’s biggest copper mine and Billiton holds a 57.5% interest in it.
But BHP is not sitting on Escondida as it now exists. The company has made a big discovery near the old mine, and will spend $US327 million to develop it. Drilling at the prospect, called Pampa Escondida, revealed that it “contains at least 1 billion metric tonnes of porphyry-style mineralization,” BHP said.
Zinc rose the most in a week, as customs data out of China, the world’s largest producer and consumer of the metal, showed that the country remained a net zinc importer for a fifth consecutive month.
Sounding a cautionary note, however, was Barclays Capital (AMEX:IPE), which wrote that “demand is weak, suggesting a build in unreported stocks.”
Source: Nickel Plummets on Sliding Stainless Demand
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