Significantly, the industrial sector scheduled more work days this holiday season than is normally the case at Christmastime. The reason? Demand for many metals is exceptionally buoyant, with prices having retrenched only slightly from highs reached in recent weeks. And with ever more demand gathering in most member nations of the Organization for Economic Co-operation and Development (particularly Germany, the U.S. and Japan), the outlook appears to be positive for the mining industry in 1995.
However, this growing prosperity will carry a cost to consumers in early 1995, as rising metal prices finally work their way through the economy. Most manufacturers have announced they will surcharge their metal products in January as delivery lead times stretch out.
As a result of this widespread economic pickup, metal consumption figures for 1994 are expected to reflect near-double-digit percentage increases over 1993. Subject only to the effect of rising interest rates (the favorite control left to most governments), the forecast for metal consumption in 1995 remains positive. With any luck, the rising interest rates will only restrain — not reverse — this growing prosperity.
Base metals continued to gyrate, reflecting year-end settlements and profit-taking. No significant weakness developed in any of the base metals, as demand for carbon and stainless steel continued unabated. Tight scrap availability and surging prices are leading the parade of virgin metal prices. Stainless tags are nearing US$1,000 per long ton, a level not seen for several years.
The following prices and inventories on the London Metal Exchange (LME) refer to December (up to the 23rd), with the previous month’s figures shown in parentheses.
Falling stocks pushed nickel to US$3.87 (US$3.43) per lb. as inventories declined to 148,836 (150,732) tonnes.
News of shortfalls experienced by African producers pushed ahead cobalt free- market quotes to US$29.50 (US$26) per lb.
On little news, lead was steady at US28.7 cents (30.3 cents) per lb. as stocks fell again, to 347,200 (357,775) tonnes.
Falling inventories held zinc at US50.5 cents (52.3 cents) per lb. as stocks fell again to 1.18 million (1.21 million) tonnes.
The combination of inventories on the LME and the Commodity Exchange of New York fell to 322,047 (337,334) tonnes, keeping copper near its yearly high at US$1.35 (US$1.27) per lb.
Shortages, producer allocation and the ever-growing appetite, among steel producers, for molybdenum oxide swelled spot-price quotes to the range of US$15 (US$7) per lb. Producers are expected to raise their tags sharply in the new year.
Ignoring (so far) the continuing currency difficulties of several countries, gold was steady at US$378.95 (US$384.38) per oz. and silver settled to US$4.77 (US$5.19) per oz.
Still consolidating after a robust year of rising prices, the platinum group metals traded down and then rebounded slightly, with platinum at US$408.46 (US$412.56) per oz. and palladium at US$153.15 (US$156.51) per oz. Oversupply and some expected decline in consumption caused rhodium to drop to US$610 (US$680) per oz. (about one-tenth of the average level reached in recent years).
— Jack Dupuis is a metals agent, broker and consultant specializing in the marketing of mining properties.
Be the first to comment on "METALS COMMENTARY — Demand for metals remains buoyant"