COPPER OUTLOOK

Evening Star, Issue 23180, 1 February 1939, Page 6

COPPER OUTLOOK

CHANGES IN PRCDUCTIOH AMERICAN DEMAND FURTHER REDUCTION IN OUTPUT IMMINENT 7 Recent cablegram messages from London suggest that further reduction in copper output is imminent. In their efforts to keep prices at about £45 (stg) a ton, the large producers of copper have changed their production plans on four occasions since October. At the beginning of October it was decided to increase the quota from 95 per cent, to 105 per cent, of standard; tonnages, representing an increase of about 6,000 tons a month. An incipient boom was developing, and in the middle of October it was decided to remove all restrictions. Prices began to fall, and when they dropped below £45 it was announced, at the end of November, that production would be so restricted that by January 1 it would be at the fate of 110 per cent, of basic quotas. There was a minor spurt in prices, but a fortnight later it was announcedthat as from December 15 production would be reduced to 105 per cent, of basic tonnages, and as from January 1 to 100 per cent. x The immediate reason for these fluctuations in production was the London price, hut the underlying cause was the American position. American buying did not expand as rapidly as was hoped in October and November, and a wide discrepancy developed between the American domestic price of 11J cents per lb and the export price of about 10i cents. The producers in the United States are not members of the restriction group because of anti-trust laws, but they are known to regulate their output and exports in close sympathy with the policy of the conference producers. Of the seven large producers in the conference three are controlled by two of the large American producers, Kennecott and Anaconda. Copper is extremely sensitive to changes in prices. For example, it is estimated that in America there are 500.000 tons which could be produced at less than 5 cents per lb, and another 400.000 tons at less than 6 cents per lb. These figures gain added significance when it is remembered that the United States is now. a high-cost producer, and that to protect the three large producers there it was necessary to impose a prohibitive duty of 4 cents per lb on imported copper. There has been an enormous increase in production of copper in Africa, where costs are very low and deposits extremely rich.