The base metals were all gushing red on Thursday. Copper was in the green until New York opened, then down it went, falling especially steeply in late morning, and barely coming off its intraday lows to finish at $1.9542/lb., down nearly 6 cents.

Nickel started down earlier, but was off as sharply, closing at its intraday low of $4.9872/lb., down almost 16 cents. Zinc followed a similar path, shedding 2 cents, to $0.6247/lb. Aluminum was modestly lower, ending at $0.6408/lb., down less than a half-cent, while lead fell to its intraday low of $0.6478/lb., down 2 cents.

Copper led the other industrial metals deep into the red, as the unemployment numbers out yesterday had traders questioning the possibility of economic resurgence anytime soon, and many decided to cash out recent gains.

“Copper’s price correction was exacerbated by earlier losses in equity markets and data showing a further deterioration in the labor and housing sectors of the economy,” said Sterling Smith, of FuturesOne in Chicago.

Peter Boockvar, equity strategist at Miller Tabak & Co in New York, commented that, “The (housing) data shows a market that still remains somewhat in the doldrums. We’ve seen … purchase data [that] shows weakness outside of foreclosures.”

And from a technical viewpoint, there has been a “correction from the triple-top chart formation last week below $2.25 a lb.,” noted John Gross, publisher of the Copper Journal.

However, the stockpile data continue to be strongly supportive. Copper inventories monitored by the LME plunged again yesterday, falling by 9,625 metric tons to 440,475 tons.

RBC Capital Markets sees copper “supported near $2.00 a lb.,” citing those “steady inventory declines” along with “rising Chinese imports, expectations of higher growth prospects in China, high physical premiums in China, [and] a recent shift in London Metal Exchange (LME) spreads into backwardation.”

In company news, Xstrata (LON:XTA) said yesterday its copper-gold project in southern Philippines will require an initial outlay of $5.2 billion to develop, according to the results of its pre-feasibility study. The mine is estimated to contain 12.8 million tonnes of copper and 15.2 million ounces of gold.

And Potash Corp. (NYSE:POT) of Saskatchewan, the world’s largest fertilizer producer, said 2009 profit will be less than it previously expected after North American sales of the crop nutrient reached “a virtual halt.”

Source: Industrial Metals All Bleed

Last 5 posts by Doug Casey

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