Nonferrous prices start week on weak side

Copper prices slipped on Monday after weak manufacturing data from New York State strengthened the dollar and signaled to traders that demand for nonferrous metals remains soft. Prices for other nonferrous metals traded on the London Metal Exchange (LME)--especially nickel, aluminum, zinc and lead--also retreated after factory-sector data showed that activity in New York continues to shrink severely.

Already, some market economists actually are reducing zinc price expectations for the July-December period, Purchasing.com reported yesterday. ¡°The pull back in the entire nonferrous metals complex that started at the end of last week continued yesterday and indeed gathered downward momentum,¡± says an analysis by BaseMetals.com. In a note to clients this morning, the London-based BaseMetals.com describes the LME marketplace as ¡°increasingly nervous,¡± and portrays rising commodity prices since March as ¡°bear market rallies¡± that ¡°are generally on borrowed time.¡±

The LME prices for nickel, the steel-alloying metal, dropped by 6% to $6.68/lb in futures trading and $6.82 in spot sales. Tin was at $6.83 in futures, down from $6.95 on Friday and $6.96 on spot.

The BaseMetals.com analysis says market participants ¡°can¡¯t expect any quick fix or lasting rebound when less cars, houses and white goods are being built, higher unemployment means less household spending and therefore less demand for consumer and durable goods. Admittedly metal production has been cut and less scrap is being generated, but generally markets are still in surplus and therefore at best you would expect a lift off the lows and then sideways trading, not rampant rallies.¡±

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