BASE METALS BOOM.

Auckland Star, Volume LXVIII, Issue 100, 29 April 1937, Page 4

BASE METALS BOOM.

i DUE TO SPECULATIVE BUYING. | SUPPLIES AND CONSUMPTION, i After a considerable reaction last weekend, metal prices have staged a (sharp recovery, and in the meantime each of the j Big Four base metals haw reached a new and remarkulde price record, said the "Economist" of March 6. Copper is now at its highest since Tin lias established a new record since 1928. Lead is higher than at any other time since 1936: and spelter has reached a new peak since i 1927. Nothing shows better than this how wrong it would be to expect a break in the metal price level. The immediate future may even see higher metal quotations, as demand is still very active. In the long run, however, the recent rise in base metal prices appears to have gone much too far. The boom has been due to very large speculative buying, the largest since 1914, on the one hand; and a complete change in the buying policy of consumers on the other. Numerous consumers, who had been used until quite recently to buy from hand to mouth, liave in recent weeks piled up stocks which are sufficiently large to cover their requirements for a good number of months. Producers of metals, however, are not taking part in the present speculation. On the contrary, production is being raised as far a~ possible; as on all metal markets the world's potential production is well in excess of potential consumption, including the much over-estimated armament consumption, supplies are likely to overtake consumption before very long. This is dl! the more likely as the present [ price level has an adverse effect on consumption. and at the same time stimulates I the supply of scrap metals, which are a perfect substitute for new metals in nearly all branches of the armament industry. Until the rising production makes itself felt in current supplies, no major change in the trend of metal prices is likely. Once, however, speculators and consumers will have realised that their fears of a pending shortage in metal supplies has been unfounded a break will probably set in. Position Not Acute. Reassurances that the present shortage would not continue was given by Sir Auckland Geddes, chairman of the Rio Tinto Company and Rhokana Corporation, in a recent address in London. "There will be adequate supplies, but for the moment there is a definite shortage," said Sir Auckland. "For a little while it is not possible to bring forward to market all those vast quantities of metal required to keep the market steady, but it is coming. I can assure you that it i 6 no part of the policy of those who are responsible for the production _of copper that it should run away in price, as it has been doing recently. It is far from our desire. Demand has been piled on demand, and speculation has been piled on top of that."