Evening star., 1936-07-22
Figures
What They Mean
BY A. A. PATTON,
Associated Press Statistician.

hbbublalVu tiCoo StetiotiNAcA'
NEW YORK, July 22.-The increased
tempo Of industrial consumption and
q more effective control over world
output stand out as important factors
In the current rise in copper prices to
ga cents pound.
The industry has come long way
along the road to normal conditions
since depression and huge supplies
beat the red metal down to about &
cents pound in 1882.
First came the stimulating effect OF
q uniform price under the N. r. A. and
the incidental inventory reductions
inaugurated under the codes. Thus.
for the first time since 1880, when
prices started TO crumble, producers
had taste Of recovery.
Output CurtaiIed.
The next important step came last
year. when the leading producers of
the world, excepting the United States
and Canada, reached an agreement TO
curtail output so that excess stocks
might be worked of.
The effect Of this step on the for
tunes of the American producers u
often overlooked.
Surplus stocks in this country were
still high early in 1885. Reducing them
required an export market for sizable
amounts of the metal or sharply cur
tailed output.
Although the agreement was not
binding on the domestic companies, it
Is generally believed in the trade that
they tacitly consented to keep ex-
ports within a certain figure. The
excessive domestic inventories were
thus siphoned into the markets Of
the world rather than burdening the
price structure here.
War preparations in Germany and
Italy last year absorbed huge amounts
Of the metal. Although consumption
so far this year is running somewhat
behind the 1885 totals, the unusually
large sales last year should be con-
sidered
In spite Of the reduced consump-
ton abroad, however, the world price
has been rising steadily and inven-
tories dropping. The reason, of course,
is that the big copper mining COM
panies have adhered strictly to the
agreement and produced considerably
less than was used.
Trouble Ahead Seen.
While the domestic companies are
protected from imports by a 4-cent
tariff. certain groups in the industry
see trouble ahead due to the present
high price. Around current levels,
they say. the marginal producer can
be expected to reappear. -
These mines are generally small.
operating only when the price OF the
metal Is such that they can make q
profit. When quotations tumble be-
low their profit line. the mine is
closed until such time as they again
reach that point.
AS a group, this large number of
minor producers could upset a price
situation balanced as nicely as the
present ons by offering all they mine
at slightly under the oficial market.
When this occurs the large participat-
ing interests chaff at the restriction bit
and inventories begin to pile up again.
A sharp break in world prices, as
they see it, would injure American
corporations by cutting OF their export
markets thereby either increasing
stocks or necessitating cut in pro-
duction.
On the other side of the picture.
however. is the sharp gain being re-
corded in consumption. The utilities,
normally taking about half the supply
of the red metal. are operating at the
highest level in their history, and while
not ordering In normal volume at the
present time are expected to be forced
to expand facilities by the extraordi-
nary power consumption. Automobiles,
electrical equipment and the building
industry are heading toward new peaks
for the recovery move and are taking
larger tonnage than at any time in re-
cent years.