More producer announcements of extended mine and refinery shutdowns during 1993 caused the markets to pause for an impact assessment. To date, the major mining companies appear to be implementing a similar strategy of closing for about one month plus taking another month for vacation.
In the industry, the vacation shutdowns usually vary from 2-5 weeks. If all follow the same line, then we can expect 1993 production to fall some 8-10% from last year which should reduce terminal market inventories to normal levels by September.
The market is now waiting to see if the other large world metal producers follow suit. If they do, metals should enjoy a healthy turnaround in the latter half of the year, especially if the economy continues to improve at the same time.
Cobalt prices are up slightly on growing uneasiness over events unfolding in Zaire. With inflation exceeding 3,000% in 1992, the currency is considered worthless. It is reported on the news wires that the Belgian authorities are now holding up a shipment of 14.5 tonnes of five million Zaire banknotes, each temporarily worth US$2, similar to those recently issued to troops and refused by merchants, precipitating the latest round of violence. February cobalt prices (with January cobalt values in parentheses) are: western brands US$15.50 ($15.25) per lb., Russian US$12 ($12) and producers US$18 ($18).
Following similar decisions by Canadian producers, nickel producers in Japan announced cuts to planned 1993 output and delays to expansion projects. U.S. stainless scrap is tight and at current prices of US$700 per long ton, the nickel value contained in the scrap is about US$2.55 per lb., just under the price for virgin metal. Average-to-date February nickel was unchanged at US$2.686 ($2.691) per lb. as inventories rose again to 80,304 (78,804) tonnes.
Attributed to more U.S. producer cutbacks, molybdenum oxide was ahead at US$2.14 lb. ($1.80) per lb. in quiet markets.
Supported by production curtailments in lead, nickel and zinc, average LME cash prices for copper were little changed at US$1.007 ($1.024) per lb. as LME and Comex copper inventories rose slightly to 428,454 (423,801) tonnes. Lead prices eased to US18.9 cents (19.8 cents) per lb., the price drifting attributed to warm winter weather and low battery sales which account for some 80% of consumption and primary production cuts. Stocks were unchanged at 235,200 (235,025) tonnes.
Supported by the announced production cuts, zinc LME cash prices rose to US49.6 cents (48.1 cents) per lb. but stocks surged again to 537,275 (519,500) tonnes.
Precious metals continue to be jostled by civil disruptions in Africa and Russia. If not soon resolved, the ever increasing inflation in Russia makes it inevitable that declining capital investment will affect social and economic stability and, more important, production of the platinum group metals. Platinum jumped ahead to US$362.60 ($359.28) per oz. while palladium continued its upturn at US$113.89 ($109.83) per oz. European currency concerns held gold at US$329.01 ($328.99) per oz. and silver at US$3.69 ($3.68) per oz.
— Jack Dupuis is a minerals marketing consultant based in Thornhill, Ont.
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