Global metals markets oscillating

Metals prices began a recovery in May, buoyed by continued positive fundamentals and supported by good economic news from many sectors other than the North American auto and house-building sectors, which continue to languish. Ignoring the recent currency turbulence and related losses, the economies of Europe, Japan, Asia and the Pacific Rim remain reasonably healthy.

Consolidating metals prices appear to have bounced off their recent lows, settled, and now look set to re-establish levels appropriate to individual metal fundamentals.

The following average prices and inventories of the London Metal Exchange (LME) pertain to May-to-date (unless otherwise stated), with the previous month’s figures shown in parentheses.

News of robust stainless production, consistent but unspectacular Russian shipments and sold-out producer positions steadied nickel prices at US$3.268 per lb. (US$3.357) as inventories fell again to 104,484 tonnes (114,390). Modest consumer interest and trader enthusiasm pushed cobalt free-market quotes for Western A Grade to US$28.50 (US$27.80 on May 1) per lb. The U.S. government has been selling off surplus cobalt and must soon decide whether it will continue to do so. These sales are the only reason cobalt prices have been static.

Declining auto sales and seasonally quiet spring demand held lead prices at US27 cents (US27.6 cents) per lb., as LME stocks fell again to 262,350 (280,350) tonnes.

Sales eased in the U.S. auto and building sectors, but firm demand elsewhere kept LME zinc prices steady at US47.1 cents (US48.2 cents)per lb. as LME stocks plunged again to 897,500 (966,700) tonnes.

After a pause during April, the combined inventories on the LME and Commodity Exchange of New York resumed their decline, reaching 206,536 (215,695) tonnes as LME copper prices settled to US$1.254 (US$1.317) per lb. in quiet trading.

Weak Chinese offers and higher U.S. production affected molybdenum markets as oxide spot prices remain around the US$7-8-per-lb. level ($7-8 at the end of April). Precious metals generally weakened in quiet markets. The rapidly deteriorating social and economic situation in southeast Europe and southern Russia may soon affect precious metals sentiments.

In lacklustre markets, the average April gold price eased to US$385.24 (US$391.37) per oz. The more volatile silver price also eased, leaving the to- date May average at US$5.56 (US$5.51) per oz.

Platinum group metals markets remain in mild retreat.

Average May platinum prices fell to US$437.58 (US$449.05)

per oz., as did palladium, which reached US$160.50 (US$170.20) per oz. Rhodium has held onto its gains at US$555 (US$470) per oz.

— Jack Dupuis is a metals agent, broker and consultant specializing in the marketing of metals.