HardAssetsInvestor

Written by Tom Vulcan  |

August 16, 2012

Depressed Base Metals Prices Find No Support From Falling Production Costs

Details

Aluminum, copper, lead, nickel, tin and zinc face more downward pressure as costs and demand are dented by an global economic slowdown.

Base metal prices are in the doldrums at the moment. What with the absence of any encouraging stimuli from either the Federal Reserve or the European central banks, and despite potentially encouraging news on the monetary front from China, they've sunk quite low. In fact, prices have fallen to some of the lowest levels for years.

For example, aluminum, copper and nickel are all facing hard times, as are lead, tin and zinc. Over just this last year, their falls have been approximately:

• Aluminum: 23 percent
• Copper: 15 percent
• Lead: 17 percent
• Nickel: 30 percent
• Tin: 21 percent
• Zinc: 14 percent

LME Aluminum (Cash Seller and Settlement): Aug. 8, 2011-Aug. 8, 2012 – $US

Source: London Metal Exchange

LME Copper (Cash Seller and Settlement): Aug. 8, 2011-Aug. 8, 2012 – $US

Source: London Metal Exchange

LME Nickel (Cash Seller and Settlement): August 8, 2011-August 8, 2012 – $US

Source: London Metal Exchange

Pulling base metals out of their funk is not a matter of simply waving the magic stimulus wand. What good China can do on that front on a unilateral basis is debatable.

With exports so vital for the country's economic growth and, Europe—its largest export market in dire financial straits—the positive effects of monetary easing in this context are questionable. There is also the question of whether, in isolation, monetary easing will contribute to any sort of improvement.