Nickel was shoved down below $8 for most of the New York day, but a spate of late-day buying pushed it back to $8.108/lb., up 10 cents. Zinc was also in the black at mid-morning, then slumped to its intraday low of $0.7277/lb., down two and two-thirds cents. Aluminum fell later and less precipitously, ending $1.2376/lb., down less than 2¼ cents, while lead plummeted to its intraday low of $0.7734/lb., down better than 9 cents.

Except for nickel, it was another grim day in the base metals markets, with copper leading the charge lower. Copper is now 20% below last month’s highs, and zinc cratered to a 2-year low.

As some analysts consider that a 20% drop defines a bear market, the reinforcing negative sentiment could build upon itself in the coming days.

And the doom and gloomsters are out in force at the moment. Typical is Michael Widmer, an analyst at Lehman Brothers Holdings (NYSE:LEH) in London, who forecasts copper to drop to $7,000/metric ton in August (yesterday’s close was $7,160).

“The wind is probably out of the base metals,” in Widmer’s opinion.

$7,000 may not be bottom, either, says Robin Wilkin, of JPMorgan Chase (NYSE:JPM) in London. Copper may fall to $6,400 by the end of the year, Wilkin says.

Stockpile changes are driving sentiment to a large degree. Whereas copper inventories monitored by the LME dropped 45 percent between the beginning of the year and May 7, they have surged since, adding 16% in July.

There are always, however, supply issues. Yesterday, for example, Southern Copper (NYSE:PCU)—one of the world’s leading producers—said it expects to produce 550,000 metric tons of copper in 2008.

That’s far below earlier predictions for output of 650,000 tons, and would even trail last year’s total of 592,000.

Labor problems in Peru and Mexico, the company’s two focus areas, were blamed for the shortfall.

Source: Base Metals Mostly Hammered Again