The base metals were nearly all in the red on Friday. Copper was in the green until just after the New York open, then plummeted to the noon hour, before rising a bit late in the day to finish at $2.2724/lb., down 2¾ cents.

Nickel rose until mid-morning and, though it sold off from there, still managed a positive close at $7.0949/lb., up more than 6½ cents. Zinc was flat until mid-morning, but fell off to end at $0.704/lb., down 2¼ cents. Aluminum fell for most of the day, dropping a penny and a third, to $0.7312/lb., while lead was modestly lower, shedding about a penny, to $0.7667/lb.

Copper led the bulk of the industrial metals lower, as the slide in equities weighed on the sector, along with investor profit-taking that could be prolonged into early next week as both the month and the quarter come to an end, with their attendant portfolio re-balancing to come.

With, in addition, prices at “over-extended levels,” Zachary Oxman, managing director with TrendMax Futures in Encinitas, California, sees the “downward price pitch to extend down toward $2.18-$2.20 support in the coming week.”

As to what lies ahead, one might hope there’d be more agreement, but there isn’t.

“There is no doubt we have seen the bottom in terms of the industrial cycle,” said Dan Smith, a Standard Chartered analyst in London. “The investor inflows into the complex have been pretty strong. People continue to believe in the commodity story as a long-term investment play.”

On the other hand, “I think weaker demand and continuing production from mines is going to push prices down over the summer,” said Charles Kernot, an analyst at Evolution Securities.

Kernot said that while hopes for an economic recovery may lend some support to copper, he expects this support will fade once data starts revealing a slowdown in Chinese imports.

And he believes income gains will have only a temporary effect on the economy. “Personal income is only going up because of the fiscal impetus,” he said, “so personal income will come down again and we can assume the savings rate will carry on up because of huge debt. That’s bad news as far as the recovery and any increase in metals demand is concerned.”

Source: Base Metals Mostly Lower