METALS MARKETS — Metals inventories on the increase

Currency movements, trade turmoil, sagging military spending and other activities influencing the world stage are slowly pushing consumers to the sidelines to await better days.

In North America, the U.S. election and the Canadian referendum are stalling many decision-makers. Europe, led by Germany, stagnates amid trade and currency negotiations. Japan, one of the few nations that can afford it, has announced positive steps to reactivate its economy. And much of Asia, especially China, is enjoying a small economic boom.

While prices decline, the debate in the nickel market goes on as producers jockey for advantage. Falconbridge has negotiated a revised tax treaty with the government of the Dominican Republic government that will probably allow its plant there to stay open.

Inco and Falconbridge are investigating the least painful methods to cut high-cost Canadian production. Elsewhere, several small producers have shut down and more are expected to follow suit.

While worldwide stainless steel output for 1992 is off, some areas are decreasing more than others as uneconomic plants are closing or consolidating and new facilities, particularly in Asia, are coming on stream with new production.

As their own consumption falls, Commonwealth of Independent States producers, who are not as yet operating in market economies, continue to manufacture and ship nickel at high levels to western customers, mainly in Europe. Average October LME cash nickel prices (to date, with September averages in brackets) fell to US$2.985 per lb. ($3.139) as inventories (with end-of-September values in brackets) jumped again to 50,850 (45,750) tonnes. Collapsing cobalt demand and heavily discounted Russian exports ($10-11 per lb.), pushed prices down to US$15.

While base metal producer sales are still steady, ever higher levels of inventories are appearing on the terminal exchanges. LME cash prices for copper dropped to US$1.028 ($1.102) per lb. as LME and Comex inventories are up again to 351,613 (336,777) tonnes.

Despite possible labor disruptions at Canadian producers Noranda and Cominco, zinc markets were easier with LME average prices down slightly to US55.4 cents (62 cents) per lb. and stocks up to 374,250 (362,950) tonnes. LME lead prices eased to US25.4 cents (28.3 cents) per lb. as stocks rose to 176,750 (169,725) tonnes.

Unrest in South Africa and currency apprehensions elsewhere continue to provide some support for precious metals markets. Platinum eased slightly to US$360.77 ($362.13) per oz. and palladium rose to US$95.76 ($90.80) per oz. Gold is volatile at US$348.44 ($345.30) per oz. and silver steady at US$3.74 ($3.77) per oz.