Nickel hit a steep slide early, falling below the $5 mark shortly before New York opened, and staying there the rest of the day to close at $4.9804/lb., down more than 56 cents. Zinc was also off early, but a spirited morning rally propelled it $0.5036/lb., up more than a penny and a half. Aluminum followed much the same path but failed to break even at $0.8964/lb., down less than a half-cent, while lead was modestly lower, ending down just under a penny and a quarter, at $0.6747/lb.

Copper suffered through another down day as steeply rising stockpiles signal the global dropoff in demand.

Inventories monitored by the LME gained 7,275 metric tons (3.2%) yesterday, to 237,925 tons, forging a fresh high since mid-March, 2004. Nickel stocks are at their highest level since May of 1999.

Not only are prices “a bit weak,” said Simon Toyne, an analyst at Numis, but the “copper stock builds that have been going on the LME — the last few days have seen a number of thousands of tonnes … is a bit unnerving.”

On the slightly brighter side, “Copper as with most other spot traded commodities, is now into the cost structure, but probably a lot less deeply than some of the other metals,” Toyne added.

Copper is “looking a bit directionless,” says Gayle Berry, an analyst at Barclays Capital. “When prices are coming off quite a bit, you do tend to see the shorts beginning to look for a bit of cover.”

Berry believes that that “is what you are going to see much more of going forward—these violent swings in prices, given the size of the short positions being built in some of the metals.”

Meanwhile, “Until we either see some further large cuts in production or more importantly some signs of improvement on the demand side, it’s too early to get bullish” on nickel, said Adam Rowley, of Macquarie Group in London.

Some such cuts are already on the way. Nickel producers including Brazil’s Vale will slash production by about 140,000 tons this year and probably another 100,000 tons next year. That will narrow the global supply surplus to 20,000 tons next year from 30,000 tons this year and 95,000 tons last year, Macquarie said.

Source: Base metals mostly lower -  Nickel producers cutting production as demand slows and stockpiles rise

Nickel briefly dropped below $5 during the pre-dawn hours, but pushed higher through most of the day, closing at $5.4817/lb., up nearly 24 cents. Zinc zigged and zagged to little ultimate effect, ending at $0.4876/lb., down less than a half-cent. Aluminum lost ground, shedding more than a penny, to $0.907/lb., while lead was strong, adding almost 2½ cents, to $0.6864/lb.

In a mixed day for the industrial metals, copper finished up its worst month in thirty years, losing 36% in October on concerns about the slowing global economy. No one is giving it much of a chance for a rebound anytime soon, either.

“The outlook for demand doesn’t look good,” said Triland Metals trader Michael Khosrowpour. “China seems to be one of the saviors around but at the same time there are a lot of other economies that are shrinking.”

Donald Selkin, of National Securities Corp. in New York, concurred, saying that, “There are some headwinds in the economy that will continue to pressure copper … It will keep trading around these lower levels.”

Advancing stocks also played their role in copper’s decline. Inventories monitored by the LME shot up 6,775 metric tons yesterday, to 239,650 tons, the highest level since mid-March of 2004.

Unsurprisingly, Citigroup slashed its 2009 copper-price forecast by 45%. Copper will average $2 a pound next year, Citi now says. That’s a steep downward revision from the previous forecast of $3.65/lb.

Meanwhile, LME aluminum stocks also jumped, gaining 1,150 metric tons yesterday, to 1.5 million tons.

Regarding zinc, the Chelyabinsk Zinc Plant, Russia’s largest zinc producer, said yesterday it has abandoned plans to develop a mine near its main production asset and will slash investments after cratering prices led to a first-half loss.

And Brazil’s mining giant, Vale, said yesterday it will cut its iron ore output by 10% percent from November, in response to the deteriorating global economy.

Source: Base metals mixed – Aluminum, copper stocks on the rise

Zinc was strong, ending just off its intraday high at $0.5375/lb., up nearly 5 cents. Aluminum hit 97 cents before beating a sharp retreat back to $0.9479/lb., up three-quarters of a penny, while lead shot up to $0.6728/lb., up 3¼ cents.

Copper led the industrial metals on a tear yesterday, shooting up the most in two years, as traders became consumed with optimism generated by the Federal Reserve.

The metal is up 25% so far during this comeback week.

The price of copper is also likely to be supported by “supply-side vulnerability,” according to analysts at Barclays Capital. Much of its runup of the past several years has to do with mine accidents, labor unrest and lower ore grades, all of which left miners scrambling to meet demand.

But, “Given the worsening sentiment about the global economy, this rally could well be short-lived,” Barclays added. “The demand picture for metals consumption continues to remain weak.”

“We have just had a massive sell-off and prices have gone well into the cost curves for a lot of the commodities, particularly nickel and zinc,” said Jim Lennon, analyst at Macquarie Bank.

Chile, the largest copper producing country, reduced its 2008 copper output forecast for the second time since July, this time to 5.45 million metric tons, mostly due to operational issues. The Chilean Copper Commission also said falling prices may slow the pace of investments in some of the nation’s mining projects after 2009.

China’s central bank chipped in, slashing banks’ benchmark lending and deposit rates by 0.27%, the third cut in six weeks. “There was clear evidence that growth in China was slowing both in data and officials saying that … we’ll see more moves to stimulate growth over the next six months or so – everywhere but specifically in China,” said Robin Bhar, a metals analyst at Calyon in London.

Source: Industrial metals agree, All push higher on Fed move

Zinc plummeted in the late morning and never found its way back, ending at $0.4885/lb., down nearly 2 cents. Aluminum had a very strong day, pushing to an intraday high of $0.9402/lb., up better than 4 cents, while lead raced to $0.6402/lb., up just over 7 cents.

Copper led most of the industrial metals higher yesterday as it followed equities markets up in anticipation of a rate cut by the Fed today.

“We’ve seen some signs of life coming back to the market with equities rebounding and commodities rising today across the board,” says Matt Zeman. “Copper could rally pretty hard for a few days if the equities hold up.”

Zeman added that he “wouldn’t be surprised to see it rally higher or for several days in a row, perhaps even testing that $2.00 level again,” but that’s it. “I’d expect it to roll back over from there.”

With copper down 35% in October, and headed for its worst month since trading began in New York in 1988, there is beginning to be some concern that supply will soon be affected.

“When prices fall below the cost of production, high-cost producers shutter projects” and trim expansion plans, said Catherine Virga, an analyst at CPM Group.

Aluminum got a boost for just that reason, as Aluminum Corp. of China (ACH), the world’s No.3 alumina maker, said it will cut capital spending by 20% in 2009.

And Rio Tinto (RTP) CEO Tom Albanese said his company is rethinking its capital investment projects “across the board” to see if it could cut costs or delay them.

Albanese also brushed off the notion that the stock market pummeling of resource companies might force it into the arms of rival BHP Billiton, whose hostile bid is now worth some $70 billion. Rio’s shares have lost 2/3 since May and are down 35% just in October.

Source: Base metals mostly higher -  Producers begin shuttering projects

Zinc declined steadily all day, barely coming off its intraday low to end at $0.502/lb., down 3¼ cents. Aluminum was off sharply, dropping nearly 3 cents, to $0.9116/lb., while lead was also hammered, shedding 3 cents to $0.6086/lb.

Copper led the industrial metals mostly lower, as fears about the Chinese economy remained in the forefront. The metal dipped briefly below the $2/lb. mark for the first time since December of 2005.

Edward Meir, of MF Global, stated flat out that copper’s slide is “attributable to the fact that the global slowdown is now spreading to China.”

The market was abuzz with the potential meaning of losing $2 as a floor.

“It’s very significant to see copper come under $2,” said Ron Goodis, of Equidex Brokerage Group Inc. in Closter, New Jersey. “People are wondering, ‘How did it fall so far so fast?’ It’s easy. With this economy, it doesn’t matter what the price is. People don’t want copper.”

Rob Kurzatkowski, a futures analyst with Chicago-based OptionsXpress, commented that, “It’s quite a move … It certainly seems as though copper traders are overwhelmed with pessimism at this point.”

But Kurzatkowski also noted that, “With manufacturing and the housing market both suffering during this economic downturn, the market’s coming back down to some more realistic levels.”

Also hurting are copper miners. Freeport McMoRan (FCX) announced that its third-quarter profit dropped 33% along with the price of the metal. Freeport CEO Richard Adkerson calls copper’s slump “striking” and “unusual,” and says his company will delay some projects planned to increase production, until market conditions improve.

Source: Most base metals slammed again -  Freeport profit takes a 33% haircut.

Nickel plunged from over $5 in the pre-dawn hours through to mid-morning, and a subsequent rally left it still with a loss of 15 1/3 cents, at $4.731/lb. Zinc fell below 50 cents early on, but showed great resilience, pushing back to close at $0.5347/lb., up nearly a penny. Aluminum had a modestly positive day, ending up two-thirds of a cent at $0.9743/lb., while lead was sharply higher for a change, adding more than 3½ cents, to $0.652/lb.

Copper led the industrial metals mostly higher as central bankers around the world moved to shore up the financial system.

However, most analysts are not viewing this as a trend reversal.

“The bailout measures, as and when they are announced, will serve to give the markets a little boost,” said Li Junchao, of Shenyin Wanguo Futures Co. in Shanghai. But, “The rebounds will likely be short-lived as commodities are determined by economic growth and supply and demand fundamentals, which cannot be good in a recession.”

Despite the day’s gains, all the metals save for aluminum headed for a week in which they lost ground. Trading has become very short term, with Fridays bringing volatility “as investors close out their positions because few want to hold on to anything over the weekend,” said Wang Pengzhen, of Zhongda Futures Co. in Zhejiang.

Lead, however, was at least one metal reacting to fundamentals, as it raced higher on a big fall in supplies. Inventories monitored by the LME fell by a hefty 1,650 metric tons, to 59,425 tons, the lowest level since May. Of the stock, nearly 20% are on cancelled warrants, not available to the market as they are earmarked for delivery.

In company news, Brazilian mining giant Vale (RIO) cast its vote in favor of a long-term bull market in commodities by allocating a $14.2 billion capex budget for 2009.

“Despite the financial shock and its spillover into the real economy, Vale is still confident of the long-term fundamentals of the minerals and metals markets,” the company said in a statement.

“We have the awareness of the need to be prudent in the face of the risks derived from the financial shock and its adverse feedback loops in the real economy. On the other hand, we do recognize the need to reconcile prudence with the exploitation of value-creating opportunities embodied in the potential for reducing capex costs arising from the current environment, thereby balancing growth with risk mitigation,” Vale said.

Source: Base metals mostly rally -  Optimism not seen as sustainable

Nickel plunged at the NY open, falling well below the $5 mark, and even a late day rally left it still short of that level, at $4.8844/lb., down almost 25 cents. Zinc was off from the pre-dawn hours to mid-morning, then pushed slightly higher to close at $0.5253/lb., down 4½ cents. Aluminum bucked the trend by moving slowly higher through the day, ending at $0.9675/lb., up better than a penny and a half, while lead took a beating, shedding nearly 6 cents cents, to $0.6163/lb.

Copper dropped to its low point since January 2006, as uncertainties about the economic future once again dominated trading.

There’s not much optimism to be found anywhere regarding the future.

“Going forward, I’m looking for further weakness in the industrial metals,” said Zachary Oxman, senior trader with Wisdom Financial in Newport Beach, California. “There’s a lot of demand destruction in commodities right now.”

Oxman went on to deliver his opinion that there’s more at work, too: “I think what you’re seeing is these hedge funds going out there and demanding liquidity. It’s a liquidity crisis and, as such, you’re going to see selling in assets that really don’t make sense to meet margin calls, or to stay afloat and get into cash.”

“All the data is pretty bearish. The industrial production was for September, so you can expect that we are yet to see the big fallout from the last month in particular,” said David Thurtell of Citigroup. And, “The Philly Fed data was shocking,” he added

Those hoping for China to pick up the slack may be disappointed. China’s industrial output in the first nine months slowed compared with the figure through August.

Whereas the country’s output rose 15.7% through August, that number drops to 15.2% when September is added in, the China Electricity Council said yesterday.

In a report out of Chile, workers ended a 36-hour strike on Thursday at the country’s top mining port, Antofagasta, allowing exports to resume before the flow of copper was much affected.

Source: More bloodletting in base metals – Only aluminum ekes out a gain.

Zinc was also off from the NY open onward, just coming off its intraday low to end at $0.6465/lb., down 4 1/3 cents. Aluminum held up remarkably well all day, actually gaining nearly a quarter-cent, to $1.0151/lb., while lead continued its long decline, dropping nearly 2½ cents, to $0.7087/lb.

Copper skidded to its lowest price since March of 2006, on the widespread conviction that even with the coordinated reduction in interest rates in the U.S. and Europe, there will be no jump start to either investor confidence or world economic growth.

“The market is saying this action is not enough,” in the opinion of Frank McGhee, of Integrated Brokerage Services in Chicago. “The best the central banks can do to turn the tide is turn confidence, and they haven’t been able to do that. Copper will continue to get punished in view of the continued, deteriorating global economic outlook.”

Leon Westgate, an analyst at Standard Bank, concurred, saying that the “coordinated action is positive but it doesn’t really impact on the immediate demand outlook for base metals … After the initial euphoria there is still concern…”

Adding to the gloom, the International Copper Study Group forecast a copper surplus of 109,000 metric tons in 2008.

That’s a difficult situation that promises to get worse. Supplies of the metal will exceed demand by 277,000 metric tons next year, the ICSG said. That’s based on a projection that mine production will gain almost 11% next year even as usage slows, increasing by only 3.4%. Meanwhile, the global nickel market will be in a 110,000 ton surplus in 2009, the ICSG predicted.

All of this makes aluminum’s steadiness a bit surprising, especially considering that inventories of the metal monitored by the LME stand at more than 1.39 million tons, the highest level since February 2004.

Source: Most base metals savaged again – But aluminum hanging in.

Aluminum moved steadily higher, adding 2 cents, to $1.0129/lb., while lead gave up a lot of its gains after mid-morning, but still managed to tack on more than three-quarters of a cent, to $0.7326/lb.

Copper bounced off its 19-month low as traders tiptoed back in on a weakening dollar and broader rebounds in commodities.

There was also a good bit of “dollar-driven short-covering,” said LaSalle’s Zeman.

But Zeman added that the copper market “will likely have trouble moving considerably higher given the dim economic outlook and lack of supply threats. Prices are likely to remain in a sideways trading pattern, near-term.” Meanwhile, the Fed’s actions buoyed some investor’s spirits.

“There’s some hope that the Fed is going to add some liquidity to these markets and help the credit situation ease a bit,”said Ron Goodis, of Equidex Brokerage Group in Closter, New Jersey. “The credit markets are now unbelievably important for copper, because of the impact it has on the economy.”

On the supply side, inventories monitored by the LME surged 9,600 metric tons yesterday, to 208,350 tons. That marks their highest level since February 2007. However, between 80-90% of stocks are held by one entity.

Still, Barclays Capital (BARC) analysts wrote that “the supply side is extremely problematic,” with output expected to remain “weak well into next year and that does suggest that when demand prospects brighten, there is the potential for a very strong price recovery.”

Source: Base metals mixed -  Copper rises as buck declines.

Zinc was also steadily down, ending at $0.7208/lb., down nearly 3¾ cents. Aluminum was weak, falling below the $1 mark, to $0.9924/lb., down more than 4 cents, while lead got pummeled, to $0.7239/lb., down 5 cents.

Copper plummeted to a 19-month low below $2.50 as concerns about falling demand in a global recessionary environment stampeded traders into further liquidations in the red metal.

Copper finished its worst quarter on record on September 30, losing 26%.

“There’s a lot of concern about future demand, given the slowing pace of economic activity and as the credit crisis spreads globally,” said Matthew Zeman, a trader at LaSalle Futures Group in Chicago. “The prospects for copper aren’t looking good.”

The selloff remains general. Commodities as a whole have fallen as investor confidence plunges and traders exit leveraged bets. The Reuters/Jefferies CRB Index of 19 futures contracts has fallen 25% in the three months ended September 30, its worst quarter since at least 1956, and dropped 10% last week, the most in more than 50 years.

“The evidence of a risk-averse attitude is clearly out there,” said John Wilson, chief market technician for Morgan Keegan, of Memphis, Tennessee. “We’ve seen people pulling out of these markets in huge numbers. That’s the face of fear. We could be heading for some major low in the markets. At this point, people don’t want to hold commodities.”

Accordingly, UBS lowered its copper forecast to $2.50 for 2009, down 38%.

Source:  Industrial metals savaged -  Copper has worst quarter on record