EDITORIAL PAGE — A boost for base metals

For the first time in more than a year, copper prices have started approaching the US$1-per-lb. level. At US93 cents, the price is roughly 20% better

than last year’s low of US73 cents. Nickel has displayed even more impressive strength, rising from a low of US$1.84 per lb. late last year to its current level of about US$2.64.

The laggards among the base metals are zinc and lead, which have yet to post similar gains. Nevertheless, it is tempting to think that the turn in the base metals market is finally upon us.

While metals speculators play a role in exaggerating price trends, the fact remains that base metal prices are determined almost entirely by the fundamental factors of supply and demand.

On the supply side, copper inventories in London Metal Exchange warehouses are declining significantly. And while market-players prepare for the possibility of a strike at Inco’s Sudbury, Ont., complex, LME nickel stocks are being reduced. On the demand side, the level of economic activity, particularly in the United States, bodes well for the future. For example, U.S. industrial output has risen for 11 straight months.

The production figures do not indicate a “fast-growth environment,” according to economists. But they do display solid growth. And of course that’s good news for base metal miners.