BASE METALS: LME Copper, Zinc Plummet On Hunt For Liquidity

Carnage ripped through the base metals markets Thursdayas the hunt for liquidity intensified, although trade buying is expected tosupport prices once global share markets stabilize. LME copper and zinc contacts led the charge lower. At one point, both weredown more than 8% on the day, with copper at a six-month low of $6750 a metricton and zinc at a 14-month low $2949.80 a ton. LME tin gained early on shortcovering but succumbed to widespread liquidation later in the session, whileLME nickel tumbled as LME stocks near 20,000 tons. "People are just falling out of the market, to the extent that they're almostignoring the metals' fundamental news," said analyst Will Adams ofBaseMetals.com. Redemptions requested by some hedge funds added to the liquidity crunch,traders and analysts said. The 45-day redemption notice period at several funds means investors have togive notice Thursday to get cash out by the end of the third quarter. "The flight to cash continues," a London broker said. Analysts said some hedge funds were liquidating base metals holdings onconcerns that U.S. subprime mortgage problems would impact metal demand for thehousing industry. This wasn't helped by data Thursday showing that U.S. housing starts fell toa 10-year low in July, after similarly bearish housing news from the NationalAssociation of Home Builders Index overnight. "Copper and the base metals will be on the defensive until calm is restoredin the broader financial markets," said Stephen Briggs, analyst at SocieteGenerale. "The metals will then be a good buying opportunity, but only if there aren'tany economic implications (as a result of the financial markets' plunge), and Idon't suspect we'll know that for a while," he said. In other news, a severe earthquake in Peru largely spared the country'smining industry, a national mining association official said Thursday. "The main mines are okay," said Juan Dumler, communications officer in theSearch and Rescue Coordination Center at Peru's National Society of Mining,Petroleum and Energy. "In general, the mining activity hasn't been affected." Peru is the world's third-largest zinc and copper miner, and fourth biggestminer of lead. Prices in dollar a metric ton. 3 Months Metal Bid-Ask Change from Wednesday PM kerb Copper 6740.0-6750.0 Dn 570 Lead 2800.0-2805.0 Dn 150 Zinc 2990.0-2995.0 Dn 235 Aluminum 2470.0-2475.0 Dn 72 Nickel 25100.0-25105.0 Dn 1300 Tin 13500.0-13505.0 Dn 325 Aluminum Alloy 2180.0-2181.0 Up 15 Aluminum Alloy- 2140.0-2141.0 Dn 5 (NASAAC)