METALS MARKETS — Lively third quarter for metals?

The traditionally slow third-quarter metals business may be overturned this year. Many metals consumers are reporting firmer order books just as metal producers are slowing their production levels because of vacation shutdowns.

If this condition persists, there would be a drawdown of producer and terminal market metal inventories as consumers stocks of virgin metal and scrap are extremely low. The increasing activities of commodity investment funds taking LME positions has added to recent market volatility. Nickel demand has remained surprisingly steady as stainless steelmakers are now forecasting firmer third-quarter sales. Producers, however, are still struggling with new sellers of Russian nickel as they attempt to intrude into the traditional markets of producers, in particular in the U.S., where, for truckload business, producers’ usual premiums over LME prices have declined sharply.

The average LME cash price to date in July rose to US$3.42 per lb. from the June average of US$3.26. Inventories declined to 25,608 tonnes from 28,296 tonnes on July 1.

Copper markets were up again on firm demand. The July average LME cash price to date rose to US$1.13 per lb. from the June average of US$1.05. LME and Comex inventories were up slightly to 291,346 tonnes from 289,071 tonnes on July 1.

Zinc on the LME was quieter as the squeeze on June cash contracts has passed. Producer sales remain firm. Average July LME cash prices declined to US59 cents per lb. from US63 cents in June as LME stocks rose to 335,300 tonnes from 330,650 tonnes on July 1.

LME average cash prices of lead moved ahead to US27 cents per lb. from US25 cents in June. Stocks edged up to 145,400 tonnes after opening the month at 143,025 tonnes.

On pronouncements by various producers and dealers, and continued quiet consumer demand, cobalt prices eased again to US$21.50 per lb. from $23; producers said they would maintain list prices at US$25.

On better industrial news, U.S.-dollar-related currency movements and continued activity by large investors, precious metals were mixed. The London morning gold average to date in July is US$346.51 per oz., up from US$340.74 in June.

Silver was much more active on news reports of a 20-million-oz.-plus sale of the metal by a Saudi Arabian bank. The average price to date in July fell to US$3.98 per oz. from US$4.06 in June.

Pushed by continued investor interest, average July platinum prices rose to US$384.45 per oz. from US$369.25 in June. Palladium also rose, with average July prices at US$83.61 per oz., up from US$80.69 in June.

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