Volume 41,   Issue 6                             June 2006


GuestBook

Scarier than Fiction
The Price of Metal is on the Rise
by John Linder

I read a lot. When Anthony Hopkins in “The Edge” survived in the Arctic using only information he gleaned from reading books, I was very impressed. 
In our area of California we have two newspapers, the L.A. Times and the Orange County Register. They are bipolar in that one leans left, and the other far to the right. I have pretty much given up on both. I read the entertainment section to learn how Brad and Angelina are getting along. I like to peruse the business section to find out how Kenneth Lay and that Skilling character down in Texas are doing. The weather section also has always fascinated me, though I find it best to turn it all 180° in order to do any real serious planning.

As a point of interest, I recently spent two weeks traveling in the Far East. By necessity, I read several English-speaking foreign newspapers. Their slant on many issues is quite different from what we typically read here in the United States. By example, the United States’ involvement in both Iraq and Afghanistan is looked on much more favorably, and most Iraqis (and Middle Easterners in general) are actually being quoted as being grateful for the U.S. presence in Iraq. So, go figure.

Another Sort of Reading

Consequently, much of my reading has turned to fiction. I enjoy fiction. It’s very entertaining and almost never hurts anyone I know. Lately, though, I have been reading a lot about the London Metal Exchange (LME). This stuff is really scary, and makes the writings of Dean Koontz and Stephen King read like children’s bedtime stories. Worse yet, it is all real and is taking place, even as I am writing now.

The prices of worldwide metals (raw materials) have been going haywire, and there seems to be no end in sight. Copper, by example (a key ingredient to brass), was at $4,550/ton (USD) late in January of this year. The LME soothsayers were then predicting copper to reach $6,000/ton (USD) by late September. Guess what? Copper hit $7,550/ton (USD) on May 4.

Affecting Us All

The same increases are affecting aluminum, zinc, nickel, iron and the list goes on and on. To say this situation is affecting our businesses is a gross understatement. It affects us all, from the OEM manufacturer all the way down to the smallest supplier of that OEM. Strategic planning is nearly impossible, as each day brings on new challenges in this arena. 

The good news, if there is to be any good news, is that we are all somewhat in the same boat. In order to successfully survive we are all going to have to grab an oar and do our part to drive the boat forward, collectively and even more importantly, responsibly.

Eventually, this situation, if left untended, will permeate every aspect of all our daily lives. It has the potential to topple even the seemingly strongest economies of the largest nations. We must take heed and be vigilant.


USG
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