The number of trade penalties imposed by OECD governments reacting to domestic complaints of dumping by foreign suppliers is up sharply. Those charged are accused of dumping product at prices below either their own domestic sales levels or under the cost of fair market production.
In North America, the most visible actions at this time are in the steel industries; both the U.S. and Canadian governments announced their intent to formally review recent imports. In the past few years, foreign suppliers have significantly increased their market shares at a time when domestic suppliers with idle capacity are selling at low margins.
In the U.S., trade issues and dumping infractions are closely monitored and swift action taken. Local industries receive good support against such incursions which usually accelerate during recessions. Recent examples are steel, stainless steel and uranium.
It now looks as if Canadian authorities are finally prepared to protect at least some industries against similar predatory trade actions. Western aluminum and nickel companies would also probably appreciate assistance similar to the recent OECD uranium agreement to restrain CIS dumping of that metal. Interestingly, this pact resulted from a U.S. uranium producer complaint.
Cobalt prices remain steady as consumers ponder conditions in Zaire, where a civil war seems unavoidable. Dealer prices (with December values in brackets) for cobalt are sitting around $15.25 ($15.50) per lb. for western brands and $11 ($11) for Russian. Producers are holding at $18 ($18).
Western nickel producers, some shut down or operating below capacity, continue to be pushed aside by high exports from Russia. The effect of their curtailments should show up in another month or so unless Russian shippers increase volumes. Although slipping again, to date average January nickel prices are still ahead at $2.752 ($2.597) per lb. Inventories, likely to continue pressuring prices, resumed their upward march to 73,968 (67,914) tonnes.
Used almost entirely by the steel industry, molybdenum oxide was steady at $1.80 ($1.80) per lb. on slow sales and high inventories.
LME and Comex copper inventories dropped to 410,154 (435,070) tonnes but average LME cash prices are little changed at US$1.039 ($1.002) per lb. as the market waits to see if the trend can be sustained.
LME lead prices settled at US20.2 cents ($20.6 cents) per lb. as stocks were up again to 230,050 (212,550) tonnes. At these prices, even secondary suppliers will experience profit difficulties.
Zinc is hanging on with LME cash prices at US48 cents ($48 cents) per lb. but with stocks up sharply to 498,050 (457,525) tonnes this will change. It will be a race to see whether the economic recovery can overtake and reverse the climbing stockpiles.
Still struggling to confirm a northerly direction, platinum eased to US$357.36 ($362.09) per oz. while palladium continued to climb ahead at US$109.88 ($106.73) per oz. Increasingly disillusioned investors, influenced by heavy selling and opinions on the next down-side support level, eased gold to US$328.63 ($334.66) per oz. and silver to US$3.69 ($3.73) per oz. — Jack Dupuis is a minerals marketing consultant based in Thornhill, Ont.
Be the first to comment on "METALS MARKETS — Metals trade wars are heating up"