Will it lift prices? We still think not, lead stocks are rising even faster and the market is due to be in surplus to the tune of 356 thousand tons this year and 709 thousand tons in 2009 – according to our goods friends at Standard Bank. Since our May article, the price has fallen from $2300/ton to $1700/ton on the LME , so far so good. There is only one thing we like more than finding a new market for metals, and that’s not being proved wrong!

–Stuart Burns

There’s plenty of street parking and inexpensive lots around. It’s about 10 minutes North of the loop without traffic. This is an open invitation: bloggers, practitioners, consultants, vendors, etc. In general, anyone with an interest in Spend Management – be it as simple as getting a real pint of bitter more cheaply – is welcome. The one rule of thumb is that if you’re a technology or services vendor and you’ve come to pitch us, we expect you to buy the group one drink. Or you also have the option of doing two shots of Jager yourself (in front of us) before starting your pitch. We would prefer the latter option given the entertainment value. In all seriousness, all are invited, and most important, we look forward to debating various procurement and supply chain topics with anyone that shows up. Drop me a line (jbusch (at) spend matters (dot) com) if you think that you can make it.

- Jason Busch

So it is interesting to note that on top of reports of an imminent recession in manufacturing in many European countries we are also seeing growth forecasts slashed in Asia. Korea has slashed growth forecasts from 6% to 4.6% as the country faces the same problem the rest of Asia is struggling with – inflation.

Indeed it may be runaway inflation and the need to raise interest rates dramatically that will put the brakes on these previously high octane economies. For the west to drop from 2 or 3% growth to 1% growth is painful but for the emerging economies to drop from 8-15% growth to 2-5% growth will be dramatic and will feel like a full blown recession. The corresponding drop in demand and de-stocking that will result in the metals markets could change the outlook from the current blind belief that demand must rise inexorably upwards. Inflation in Asia is on the verge of getting out of control with rates exceeding 20% in some markets like Vietnam and Kazakstan.

Even previously solid markets are seeing rising inflation like Thailand 8.9%, Philippines 10%, India 11%, Indonesia 11% and China where inflation has exceeded 10% for much of this year is not only raising interest rates but increasing bank reserves and allowing the currency to strengthen at an annualized rate of 20% in the first quarter, choking off exports, as the authorities desperately try to cool the economy. Cumulatively these changes will bring about slower growth and hence a more manageable demand. Let’s hope that feeds through into the metals markets in an orderly fashion.

–Stuart Burns

Dan DiMicco, Chairman and CEO of Nucor recently said “that futures trading was ‘phony baloney’ that encouraged unethical and illegal activity.” Why would the CEO of Nucor make this comment? Specifically, who/what does he mean by unethical and illegal? Mortgage CDO traders? We can’t help feeling Dan DiMicco is being deliberately misleading when he discusses futures trading and sub-prime loans in the same breath. He knows there is no connection or even similarity between the two but he is attempting to bad mouth futures markets by making a false link to discredited CDO’s. There is nothing illegal about futures markets they have been in existence for well over 130 years; if there was anything illegal about them you can be sure a lawyer would have found it before now. And tell me is there anything immoral about a buyer or seller wanting to stabilize their company’s prices by buying or selling forward on an exchange? Nucor is making record profits on the back of a market made unnecessarily tight by US producers opportunistically exporting while putting their long suffering domestic customers on allocation. Now Dan, is that a morally defensible position? (more…)

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Now Deloitte is not a firm that I think of when I think about the cutting edge but I suppose the “heat” from the conference called for a new approach. Not to minimize the real fireworks from the conference itself, we have two posts on this subject, one that just appeared and one coming out later this week. And though we won’t be promoting metal bustierres and funky welding tanks, we promise a worthwhile read.

–Lisa Reisman

(Hat Tip: DP, thank you!)

And though it is a lot more fun to write the lighter pieces, I thought a light intro into a controversial topic might make for good reading as we prepare for the long holiday weekend.

So here is the topic: Why are steel prices so high? (more…)

Then again, the rising cost of small arms ammunition and rounds could make gunplay too expensive for the average American. During the past two years, the U.S. has observed a 70 percent hike in these ammunition prices, dampening the spirits of amateur marksmen.  Some prices have more than doubled in the past two years. While partial blame falls on the war and the falling dollar, rising metal prices have also led to the ammunition pinch. In Alaska, for example, “lead shot for shotgun shells used to cost $18 a bag. Now it’s more than $50, if you can find it.”

Although lead is finally decreasing in price, the metal still spiked to $1.75/pound this winter, a drastic difference from its earlier 50 cents/pound. Copper and brass, also part of the ammunition recipe, reached some of their highest marks last year, and have witnessed limited gains in the past week. The same day that the Supreme Court made their second amendment ruling, copper futures rose to $3.86 in New York. Likewise, the price of brass has recently increased due to excess industrial demand. Zinc is the only ammo ingredient that seems calm in the market. However, since zinc is also necessary for steel creation, a rise of zinc prices is expected in a path similar to iron-ore. Until metals prices stop rising faster than a speeding bullet, gun enthusiasts may need to find some new hobbies.

–Amy Edwards