Start of Peruvian Strike Supports Copper, Aluminum Fundamentals Seen Strong
Jul 1st, 2008 | By Doug Casey | Category: Gold MarketDoug Casey says: “The largest federation of mining unions in Peru said on Monday a strike had started, disrupting operations at Peru’s biggest copper pit, Antamina, jointly owned by BHP Billiton and Xstrata.”
The base metals were mixed on Monday. Copper suffered a steep late morning dip, but immediately rallied back to where it began the session and finished at $3.9571/lb., up a penny and three-quarters from Friday. Nickel was up during the pre-dawn hours, then held more or less steady through the day, closing at $9.7681/lb., up 9¾ cents.
Zinc also suffered a morning slump, but failed to make it back to even at $0.847/lb., down more than three-quarters of a cent. Aluminum was highly rangebound and ended little changed at $1.3903/lb., up less than two-tenths of a cent, while lead was much the same to the downside, losing less than two-tenths of a cent, to $0.7908/lb.
Copper traded off a strong base of support due to labor problems in Peru, the world’s second-leading source of the metal.
The largest federation of mining unions in Peru said on Monday a strike had started, disrupting operations at Peru’s biggest copper pit, Antamina, jointly owned by BHP Billiton (BHP) and Xstrata (XTA).
That copper didn’t move more, according to Edward Meir, a metals analyst at MF Global (MF), was that, “The strike in Peru is probably starting to be discounted as people look to a possible settlement down the road.”
Meir added that, “I think a lot of these metals are very overdone so we wouldn’t be surprised to see a bit of a pull-back.”
Nonetheless, supply issues were also supportive. Inventories monitored by the LME declined by 300 metric tons yesterday, to 122,600 tons. That’s sufficient for only two and a half days of global consumption.
Another good indicator of tightness in copper supply is that the metal is in backwardation, where the spot price for the metal is at a premium over the three-month price. Copper’s backwardation is up to $180/ton, the highest difference since May 2006.
And regarding aluminum, prices could rise 12% next year due to the higher cost of coal, which will make production more expensive and force smaller plants to close, wrote analysts at UBS.
“We expect market fundamentals to continue to tighten as global constraints on energy supply grow and impinge on the aluminum industry,” the UBS report said.
Source: Start of Peruvian Strike Supports Copper, Aluminum Fundamentals Seen Strong
Advertisement
Steve Sarnoff makes one pick each week. In both 2005 and 2007 - he picked 100% winners. His recommendations are straight-forward, easy to understand, and they could help you turn just $5,000 into $1,000,000.
Get all the details here on this amazing offer.
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.