Lead Investing News

By Heather Matthews - exclusive to Lead Investing News

Base metals are continuing a downward spiral as the market reacts to the federal bailout plan and the general atmosphere of caution and unease. Base metal prices dropped on Wednesday, as September retail level reports (U.S.) were revealed, detailing reduced purchasing by consumers.

After the report details surfaced, base metals, which are primarily used in industrial applications, started to drop on metal exchanges. The current American financial crisis (and troubled European markets) are continuing to hinder base metal values: investors don’t feel good about the demand for these metals during these tough economic times.

“Commodities are being avoided like the plague”, according to William O’Neill, an American executive at LogicAdvisors. “We have to get confidence back in the economy before we can see any kind of turnaround for commodities.”

Lead and zinc both fell today, with marked declines from yesterday’s closing spot prices. Lead is currently down 8.73 per cent from yesterday (non-LME spot prices), trading from 0.6049 (low) to 0.6843 (high) USD per lb. Zinc is also declining, with a percentage decrease of 7.95. Zinc is currently trading at a low of 0.5071 to a high of 0.5791 USD per lb. Copper is also suffering on world markets: today. , it hit its lowest spot price since 2006, dropping 8 per cent on metal exchanges.

According to the latest economic data, United States production levels are the lowest they have been since 1974. These statistics are causing a renewed commodity sell-off which is having a detrimental effect on lead and zinc metal spot prices, as well as lowering base metal values across the board. Purchases by American consumers fell 1.2 per cent in Sept./08.

On world markets, Chinese Jiangxi Copper Co. stock plummeted by 10 per cent today, as a result of the low prices for the metal on the Shanghai Metal Exchange: most Chinese commodity suppliers saw their stocks fall yesterday. Zhuzhou, a leading producer of zinc in China, saw their stock plunge 8.5 per cent.

Chinese analysts are attributing the declines in commodity investing to market confusion. Fan Dizhao, of Guotai Asset Management Co. (Shanghai, China), weighed in on the current market climate in China: “We are facing both domestic and global economic uncertainty…it remains to be seen whether negative factors have mostly been priced into the decline.”

The serious decline in demand for commodities due to the American financial crisis is impacting the entire world. Until increased production levels and an abatement of the current credit crunch restore investor confidence, commodities will be subject to continued “sell-offs” and liquidation in the future.

Zinc and lead company news

Teck Cominco - (NYSE:TCK - TSX:TCK.B) - Teck Cominco is Canada’s largest mining company: their headquarters are located in Vancouver, B.C., Canada. Teck Cominco operates 16 mines in America, Canada, Peru and Brazil, producing gold, copper, zinc, molybdenum, and other resources. Today, Teck Cominco stock fell by 0.36 per cent on the Toronto Stock Exchange, with a current share price of $15.10 CDN.

On October 13/08, Teck Cominco representatives announced the sale of 27.6 units of Fording Canadian Coal Trust to a Canadian Chartered Bank. Teck will be selling their remaining 1.85 million units of Fording stock to an affiliate of the Ontario Teacher’s Pension Board: this agreement was formally announced in late July of 2008.

SRA closes zinc mines in Tennessee, USA, as credit crunch escalates

Low prices for zinc have combined with the current credit crisis: these unfavorable conditions have led to the Strategic Resource Acquisitions Corporation’s decision to downscale operations (maintenace only) at their Gordonville, Tennessee zinc mine. They are also stopping the construction of their Elmwood and Cumberland mines.

For more information on declining copper spot prices, please visit www.copperinvestingnews.com