COPPER AND TIN

Wanganui Chronicle, Volume 83, Issue 3, 5 January 1939, Page 11

COPPER AND TIN

CURTAILMENT OF PRODUCTION THE QUOTA PROBLEM As the current rate of production is not known, the extent of the curtailment of copper production from the decision to reduce the quota from 110 per cent, to 100 per cent, of basic tonnages as from January 1, is not exactly ascertainable. It is believed that the restriction will amount to about 6000 short tons, taking the aggregate tonnages of the seven mines signatory to the agreement as about 725,000 tons per annum. Giving this estimate, the Financial News points out that the reason for the rapid changes in the quota during the last two months is that the aim of the producers, judging by recent decisions, is to maintain prices about £45 a ton. Despite the reintroduction of restriction the prices fell to £42 early this month, when political fears caused fairly heavy speculative liquidation. The market was depressed by the contraction in armaments ouying after the crisis, and the recent slowness of the United States market. Pioduction, moreover, is believed to have been substantially in excess of 110 per cent. The general opinion in market circles, the Financial News says, is that restriction to 100 per cent, should ensure equilibrium between supply and demand provided consumption is reasonably satisfactory. Should consumption be maintained at the current rate of about 11,000 tons a month, tin stocks, which had reached recently a high total of more than 30,000 tons, are expected to decline gradually. This view is stated to have been considered by the International Tin Committee in fixing an unchanged production quota for the first quarter of 1939. Of the quota of 45 per cent, of standard tonnages, 35 per cent, will be “free” production, the remainder being directed to the “buffer” pool, which will be raised by 5000 tons to 15,000 tons. Based on a standard tonnage of 206,770 tons for the countries embraced in the restriction scheme and allowing for Siam’s guaranteed annual output of 11,239 tons, a quota of 45 per cent, signifies a monthly supply of about 8100 tons. With the production of non-signatory countries, the total should be between 10,500 and 11,000 tons. Under existing conditions little difficulty is anticipated in keeping the price of tin between £2OO and £230 a ton. The pool, which has for one objective price limits within this range, is now expected to fulfil a chief function of smoothing out price fluctuations arising from temporary maladjustments of supply and demand. Some sections of producers, notably the Dutch, anticipate that by the end of the first quarter of 1939 free stocks may be reduced to 14,000 tons, or 10 per cent, of annual consumption. Though this would be below normal, the pool stocks of 1500 tons would remove the possibility of a shortage. Should consumption maintain its present basis, these producing quarters suggest that the “free” quota might be raised to at least 45 per cent, for the second quarter of 1939.