Nickel followed copper’s lead as prices fell precipitously, as the metal lost 44 ½ cents to close at $8.4361/lb, a two-year low. Zinc started the day well, reaching an intraday high over $0.87 in early-morning trading, but soon followed the other base metals into the red, sliding to $0.8385/lb., down 1 ½ cents. Aluminum dropped as well, closing down almost 2 cents, at $1.3206/lb. Lead erased some of its gains over the previous two days, falling back below the $1 mark to $0.9902/lb., down 2 cents.

Copper’s losses were the result of a poor outlook for global demand as sales of previously owned homes in the U.S. fell last month to their lowest levels in more than a decade, according a National Association of Realtor’s report. This evidence of the continued housing slump bodes poorly for copper demand, which is largely dependant upon construction of new housing.

Concern about falling demand is outweighing fears of news of declining mine output from Codelco, the largest copper producer in the world. Codelco announced that labor problems and declining ore quality might cut production for the fourth consecutive year.

According to Matthew Zeman of LaSalle Futures Group, traders are “shrugging off” supply concerns because of “the outlook for a global slowdown and the anticipation of falling demand.” He continued that “people are thinking, ‘What difference does it make anyway,’ since demand is going down.”

Nickel’s huge drop was also fueled by falling demand. Robin Bhar of Calyon wrote that “There has been increasing evidence of weak demand from the stainless steel sector in the third quarter.” Production of stainless steel accounts for two-thirds of all nickel consumption.

Source: Base Metals Fall

Nickel sagged for nearly the whole day, only coming off its intraday low late in the session to close at $9.6819/lb., down 8¾ cents. Zinc was up and down to little ultimate effect, ending at $0.8492/lb., up a quarter-cent. Aluminum had a good day, pushing through the $1.40 barrier to $1.4073/lb., up a penny and three-quarters, while lead prolonged its losing ways, shedding three-quarters of a cent, to $0.7832/lb.

Copper forged an 8-week high on concerns about labor unrest in Latin America. Workers at more than a dozen mines in Peru began their third national strike in less than 14 months on Monday, while Mexico’s largest mining union approved a one-hour walkout for this week.

The latter walkout will be the third union protest this year, and will likely not be the last. Workers in Mexico have also approved striking for a longer period later this year, the National Mining and Metal Workers Union says.

With the metal once again flirting with the $4/lb. level, its ability to breach the barrier will “make or break the market,” according to one trader.

While supply problems may be uppermost in people’s minds at the moment, there is plenty of long-term bearish sentiment out there.

Present higher prices for copper are “unlikely to be sustained because of weaker demand,” wrote Robin Bhar, an analyst at Calyon in London.

Legendary Hong Kong investor Marc Faber essentially concurs, saying that, “The industrial-commodity complex is vulnerable because demand will slow” as global growth slumps. Moreover, he added that he expects the worldwide economic decline to last a “very long time.”

Meanwhile, global copper mine production capacity will grow by 5.2% a year through 2012, the International Copper Study Group said, with South America and Africa accounting for more than 40% of the capacity gain.

Source: Copper Holds Strong on Labor Unrest

The Atlanta-based Delta bought Northwest for $3.63 billion, all in stock, creating a single carrier with a combined enterprise value of $17.7 billion. The landmark deal is expected to ignite an industry consolidation wave, as small or struggling airlines go for size in order to compete with Delta’s newfound market heft at time when a slowing economy and soaring fuel costs are eviscerating profit margins for marginal players.

“Expect [the] dominoes to fall,” Bear Stearns Cos. Inc. (BSC) analyst Frank Boroch wrote in a note to investors.

Four smaller U.S. airlines have filed for bankruptcy in the past month – Frontier Airlines Holdings Inc. (FRNT), Skybus Airlines, Aloha Airgroup, Inc. and ATA Airlines Inc.

And now that the first major hurdle of Delta’s Northwest acquisition has been cleared, talks between UAL Corp.’s (UAUA) United Airlines and Continental Airlines Inc. (CAL) will elevate in priority.

Since 2001, U.S. carriers have shed more than 150,000 jobs and lost more than $29 billion.

Looking ahead, a report from Calyon Securities predicted the U.S. airline industry would lose more than $1 billion in 2008, mostly from the one-two combo of high fuel costs and shrinking demand, Reuters reported. However, top carriers Delta and Southwest Airlines Co. (LUV) are best positioned to weather the storm, Calyon analyst Ray Neidl said.

The new Delta is expected to generate more than $1 billion annually in revenue, even as it streamlines operations and trims overhead. And its balance sheet will have an expected liquidity of about $7 billion at the close of the deal.

“Today, we’re announcing a transaction that is about addition, not subtraction,” Richard Anderson, Delta’s Chief Executive Officer, said in a statement.

What’s In Store for Investors

Under the transaction’s terms, Northwest shareholders will receive 1.25 Delta shares for each Northwest share they own – a 16.8% premium based on April 14 closing prices.

The merger is subject to the approval of Delta and Northwest shareholders, and must also pass muster with regulators. It is expected that the regulatory review period will be completed later this year.

Board Members, Pilots Shuffled

Delta’s Anderson will be chief executive officer of the combined company. Delta Chairman Daniel A. Carp will become chairman of the new Board of Directors.

Northwest Chairman Roy Bostock will become vice chairman. Ed Bastian will be president and chief financial officer.

The board of directors will be made up of 13 members, seven of whom (including Anderson) will come from Delta’s board, and five of whom will come from Northwest’s board, including Bostock and Doug Steenland, the current Northwest CEO. One director will come from the Air Line Pilots Association (ALPA).

Delta’s 7,000 pilots sealed the agreement by supporting a new labor agreeing that includes an equity stake.

Northwest’s 5,000 pilots will be asked to join a contract before the deal closes, but Reuters reports that they will use “all resources available to aggressively oppose” the deal after the unions could not agree on how to work under one seniority umbrella, a key determinant of shifts, pay scale and what airplanes they fly.