EDITORIAL PAGE — Yes Virginia, there’s hope for base metal

Could this be it? Could this be the turn in the base metals markets for which many of us have been hoping? The charts for nickel, copper, lead and zinc reveal that prices have at least come off the mat.

Yet some haven’t moved by much. Copper is still at a point where most Canadian producers won’t worry about buying black ink to splash on their earnings statements. The price of the red metal is around US76 cents per lb., only 4 cents better than its Oct. 27 low of 72 cents. (All metals prices are stated in U.S. currency.) Zinc prices are ahead too. And lead? It’s up as well, by a couple of cents to 18 cents.

However, nickel has run up impressively at a time when inventories are still rising, albeit at a slower pace. It dropped in the early fall to less than $2 per lb. Bottom seems to have been touched on Sept. 29 when spot prices hit the $1.86 mark. Week after week following that dip, nickel added a few cents and by Dec. 8, spot prices had recovered to $2.26.

If you’re the type that enjoys speculating on a metals turnaround, you might also find encouraging signs in the behavior of the shares of Canadian base-metal miners. Inco, Noranda, Cominco and Rio Algom all reached 52-week highs. Intimates of the gold market will recall the gold equities did the same — the shares all moved well in advance of the bullion price itself. Our metals analyst, Jack Dupuis, figures several fundamental factors are lending a little life to the nickel market. Inco’s announced cutbacks have had a mild effect. But as he points out in last week’s metals report, this move won’t affect the short-term.

He is also encouraged by declining exports from the former Soviet Union, now known as the Commonwealth of Independent States (CIS).

On the demand side, bullish news is emanating from the U.S. The economy is on the mend — a sustained mend, according to optimists. This announcement comes from people who spend their lives reading the economic tea leaves of a given country: purchasing managers’ reports, capital-goods spending forecasts, capacity utilization rates and the like.

Well, it seems the experts are impressed with most of this esoterica. Other indicators are up as well. Housing starts in the U.S. rose nearly 14% in October and retail sales had gained definite momentum. Even the Big Three North American auto-makers, having been hammered for the better part of a decade by Japanese imports, are being regarded favorably by financial analysts.

After sifting through all these various indicators, the forecasters conclude the economic recovery to the south is real. Even consumer confidence is on the uptick.

In Europe, the recession still lingers, but Japan put in a surprisingly strong performance in the third quarter. And the Chinese economy, according to the latest news reports, is cranking up again after several months of a government-initiated slowdown.

So if you’re looking for signs of good times ahead, there are plenty out there. The gold miners received their Christmas treats earlier this year; perhaps their base-metal cousins are about to get theirs.