PEAK PRICES IN VIRTUALLY ALL METALS SINCE MID-2008 COLLAPSES

 

Metals prices generally are high enough to trigger production increases across the board if sustained.  Presumably the traders bidding up prices anticipate enough demand growth to absorb production restarts and any new capacity.

 

We distinguish between copper, lead, zinc, steels scrap and metallurgical coal in which excess supplies are small and little new capacity has been planned.  A 5%-10%+ further demand surge puts those commodities “off to the races.”

 

Aluminum, nickel, molybdenum and iron ore have 20%-plus standby capacities and new capital expansions in advanced planning.   Companies in these sectors must sustain production shutdowns as conditions improve to permit sustained price gains.  Alcoa, Rio Tinto, Rusal and Mideastern producers require sustained aluminum output restraint, assuming Chinese producers restart to meet local aluminum demand.  Vale, Xstrata, Norilsk and others must keep nickel output at prior levels.  Vale, Rio Tinto, BHP Billiton, Fortescue and others must keep iron ore output and expansion plans in check as steel output outside China is week.  FCX and Thompson Creek must hold moly output down and keep expansions on ice.