Zinc continues upward movement (May 25, 1992)

Except for zinc, first-half May average metal prices continued to be swayed by ongoing uncertainty with worldwide political and economic events.

Questions regarding future export levels from the former Soviet republics, drought in central Africa, labor unrest and power-sharing controversy in the Republic of South Africa and Peru, and the rate, if any, of the economic improvement in the Western World, added to the nervousness.

The squeeze on zinc settlements continues with closely held stocks and prices both on the rise. From the beginning of May, LME inventories are up to 255,000 tonnes from 239,000 tonnes and the average price has risen to US61.5 cents per lb. from the April average of US59.2 cents.

Copper experienced a small drop in LME and Comex stocks to 297,000 tonnes from 308,000 tonnes, but the May LME average price was little changed at US$1.002 per lb. compared with April’s US$1.005 average.

Lead, trading quietly, saw LME stocks rise slightly from 131,000 tonnes to 136,000 tonnes. Prices were eased from the April average of US24.2 cents per lb. to US23.8 cents for the first half of May.

Good news for nickel are stainless steel industry reports of increased melt schedules and stronger Asian buying, particularly by the People’s Republic of China, which is reported to be in the midst of an economic boom. Detracting somewhat are reports from Europe of increased availability of the Commonwealth of Independent States’ (CIS) high alloy scrap at prices, for the nickel-bearing grades, some US15 cents per lb. under LME levels. LME stocks of 27,000 tonnes are up slightly from May levels of 26,200 tonnes. Prices eased from April’s average of US$3.367 per lb. to US$3.325 for May to date.

Cobalt dealer prices were unchanged at US$26.50 per lb. and the producer price stayed firm at US$25 as the buyers and sellers marked time awaiting further news. Some consumer segments, particularly superalloy production, is reported to be down about 30% from normal. Trade opinion continues to forecast higher prices because of low production levels.

Gold prices eased down to US$336.23 per oz. for May to date from April’s average of US$338.73 despite much press coverage asserting a turnaround has occurred. Producer hedging, investor and some central bank selling are blamed. Without some upset to attract buyers, the chart continues to show a downward direction.

Silver prices moved up slightly to an average of US$4.07 per oz. for May to date from the April average of US$4.05 oz. As with gold, annual consumption exceeds production, but selling by hedgers and investors maintains adequate supply to the markets.

Platinum was active. Attributed to a slowdown in production, growing uneasiness with CIS export levels, South African turmoil and a modest pickup in expected autocatalyst needs, average platinum prices increased to US$353 per oz., up from the April average of US$347.71.

Like zinc, the LME tin market seems to be awakening. Cash and 3-month prices at the US$2.80-per-lb. level, and inventories of 12,000 tonnes, were all up slightly from the previous week.

— Jack Dupuis is a minerals marketing consultant based in Thornhill, Ont.