Commodity markets near disarray
PA London Commodity prices tumbled to their lowest level for several years yesterday, with some London markets near to disarray, and no quick relief in sight for producers. The latest setback in prices was credited to the ceasefire in the Falklands — on the theory that war drives prices higher because certain • commodities become scarce. But weakened by the world , recession, prices for raw materials ranging from cocoa to copper have been in retreat for months. Some metals have sunk to levels that analysts said compare with the depression levels of the 19305. “It's a merry-go-ground, a downward spiral,” said Bruce Leeming. deputy managing director of the London commodity brokers, Rudolph Wolff. He said the selling fever that has swept commodity* markets has been feeding on itself, although. he is now finding some symptoms of recovery in the'ailing metal markets. : j ” Copper, a key industrial material that closely reflects trends in the World economy, is a case in point. It fell to L 735 today, the lowest in 47 months. ' 5 At a conference in Copenhagen this week, the London-
based Commodities Research Unit said the cost • of producing a tonne of-copper now exceeds the price. Scarcely a handful of mines around the world, even those in cheap-labour areas such as Africa, can cover their costs, let alone show a profit. Copper prices are the lowest since the 1930 s if inflation is taken into account. The problem for other metals is much the same. In Toronto, industry analysts were hoping that a two-week-old strike at; the Sudbury. Ontario, mine of Inco, the world’s leading nickel producer, turns into a prolonged one. ..They said the walkout could be a blessing in disguise since a two' or three month shutdown Would help the .company reduce its heavy supplies: , Inco has about 67 million kilograms of unsold nickel on its. hands, equal to five to. six months supply, and if the strike by metalworkers lasts nickel prices could move up. “The slack is remorselessly being taken out of the markets.” Mr Leeming said of the closures and production cuts in the metals business to absorb the slump in demand. Mr Leeming is cautiously hopeful that prices of metal’s
will pick up and is keeping a close eye on trends in the U.S. economy for the signal that a recovery is under way.
“It’s just unthinkable that prices will go on at these distressingly low* levels where the cost of extracting them is more than the selling price," he said. James Ainsworth, mining consultant to London stockbrokers. Rowe and Pitman, expressed doubts that copper prices would shoot up. He feels the average is unlikely to exceed SUSI.OS a pound in 1982 prices for the next eight years — but that would be a significant improvement over today's levels.
The; price of gold bullion was fixed in London today at $118315 an ounce, its lowest since March.
Silver and platinum prices on the futures markets dropped to the lowest levels since 1978, with silver quoted at £3.21 an ounce and platinum at SUS27I.
Tin touched a 17-month ’ low of £5850 sterling a tonne before edging higher, depressed by worries that an , international tin agreement to stabilise world prices . would not be put into effect by the July 1 deadline. ;
'Zinc, aluminium, nitkel, rubber, coffee, sugar and cocoa also fell on the markets for future delivery.
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Press, 17 June 1982, Page 23
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563Commodity markets near disarray Press, 17 June 1982, Page 23
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