METAL MARKETS — Sluggish economic recovery keeps metal

The “dog days” of summer are gone and the increased gridlock of the European, East Bloc, Japanese and U.S. economies are the current preoccupation of market analysts.

Industry news and government moves are closely studied as the impact of each announcement is related to the metal markets where production and sales continue at slightly slower than usual seasonal levels.

In September, as higher business levels resume, the question will be: at what level? Inventories of finished goods and scrap are tight as low production pushes commodity stocks higher. Generally, disruptions or a pickup in consumer demand will have to be unusually strong to move commodity prices much higher than current levels before year-end 1992. Thereafter, the spasmodic turnaround currently under way should begin to steady and improve most metal demand.

Evidence is growing that currency re-alignments may soon be necessary between the major trading blocs which may prompt some to seek the refuge of their favorite metal.

Freed by falling domestic consumption, Russian exports of aluminum and nickel are depressing prices for these metals. Producers’ stocks are climbing and more cutbacks may be required if higher order levels do not soon materialize. Augustclosing nickel stocks (with equivalent July numbers in brackets) surged again to 43,302 (34,560) tonnes as LME average cash prices eased slightly to US$3.298 ($3.402) per lb.

Reports of civil unrest in Zambia and quiet consumer demand left cobalt prices unchanged at US$19-20 per lb., and about to test the recent price trend line.

Reversing recent declines, LME and Comex copper stocks edged up to 304,157 (283,657) tonnes, steadying the average August LME cash price at US$1.141 ($1.144) per lb.

Zinc markets were quiet with August closing stocks up again to 349,225 (338,725) tonnes. The August LME cash average also rose to US61 cents (59.9 cents) per lb. Ongoing civil unrest in Peru added firmness to markets. Lead stocks and prices continued their firm upward march. The August LME cash price rose to US29.6 cents (28.4 cents) per lb. and stocks closed at 154,825 (147,200) tonnes.

Average August precious metals prices were generally softer with some speculators selling positions. Despite many domestic problems, South African and Russian platinum production continues apace while Japanese demand for jewelry and auto industry needs for catalyst are both down. Platinum prices dropped to US$359.82 ($383.36) per oz.

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