Evening star., 1941-06-15
Profit Outlook
Only Fair for
Metal Firms
Arms Boom Promises
Little in Way Of
Added Earnings
spe cial Dispatch to The Star.

rous metals will probably hold above
domestic capacity, according to a
prepared by Standard &
Poor's Corp.
Certainly this will be the case for
the second half of 1941. and metal
prices will compare favorably with
1910 levels. But producers stocks
are drasticaIly depleted. so that
sales must be held to current pro-
duction.
With tax and other costs rising
and metal prices fixed, the profit
outlook is no better than fair.
April requirements for both war
and peace time needs were subStan-
TALLY greater than the sum OF i'm
ports and domestic production at
in virtually all the more
important metals. except molyb-
denum and lead Yet, defense ex-
penditures are to be doubled by the
end of l941 and may be three times
the April rate by the close of 1912.
A considerable further rise in de-
mand is therefore to be expected.
Shortages General.
For many uses, non-ferrouS metals
are competitive. Thus. soon after
serious shortages restrict consump-
ton in one metal, tightness develops
in other metals. AS result, some
measure of Government control has
been applied this year to virtually
all metals in order to secure aoe-
uuate supplies for defense work.
AS shortages spread to an lncreas-
ing number of the non-ferrous
metals, civilian consumers must find
from other fields, In
many instances, substitut;ons al
ready planned are FASTENED. More
important commodities used include
plastics, iron and steel, and paper.
Meanwhile, consumers are using
non-ferrous m e Is with much
greater economy than current prices
would ordinarily compel, partlCu-
larly in the can and foil manuiac-
turing industries. From the point of
view of the non-ferrous metal pro-
ducers. the obvious danger is that
many of these shifts and economies
will become permanent.
Higher Prices Unlikely.
On previous occasions of rapidly
rising demand, higher prices have
more than compensated for in
creased costs. In the present IN
stance, prices are rigidly controlled
through the ONCE of Price Admin
stration and Civilian Supply.
Where prospective supplies are in
adequate for both defense and civil
an needs, the Government is con-
fronted with the alternatives of
allowing prices to rise or of forcing
,urtailment in civilian consumption.
Since the administration seeks
10 prevent price imitation, particu-
arlv where capital would profit.
further price increases will probably
be allowed only in those rare in
stances where higher price would
stimulate production.
With the possible exception of cop
per, therefore, higher prices are
most unlikely.
With product prices fixed. tax and
other costs rising, and indications
that actual sales volumes will not
exceed 1910 levels, earn
ings in 1941 will do well to equal
those of last year. Exceptions exist
in the case of individual companies
which will materially increase their
and sales.
Copper Imports Rising.
Copper. the most recent metal to
be placed under mandatory priori-
ties, threatens to become increas-
ingly scarce. Domestic mine and
scrap production cannot soon be
raised above the current level of
100000 tons a month, while blister
stocks have been drawn down to
the point where the output of re-
fined copper cannot be held above
mine production, as was done dur
ing the first quarter of 194l.
The effects of a higher price or
a subsidy for marginal producers
are being investigated, but indica-
tions are that not more than 1000
tons a month additional domestic
production could be secured Mean
while, imports from Latin America
are supplementing United States
production.
Through Metals Reserve Co., the
Government has contracted for ca
pacity output from Latin America
paying 10 cents pound in United
States ports and allocating the met.
al to consumers at II cents a pound
Thus, the Government is accepting
a 2-cent profit in place of the a.
cent duty. But such imports have
been at the rate of only 10000 tt
35, 900 tons monthly with $4,000 tons
the best average rate that can be ex.
pected in the near future. Since
aggregate domestic consumption viii
average about 10000 tons a month
this year and stocks of copper arr
already close to the working mini
mum, shortages can scarcely bt
avoided.
Early in 1912, new facilities shoule
be in production, adding better thar
5000 tons monthly, but this viii
be more than offset by increases II
defense needs, already estimated tt
account for more than half cur
rent consumption.
Lead Shortages Unlikely.
Among the base metals, lead il
probably the least affected by wal
demands. Accordingly, domesti'
supplies generally have been ade
quate, although the increasing us'
of lead by expanding industry ant
as substitute for other base metal
has so increased demand and prizes
that imports have risen sharply.
One of the first base metals il
which tightneSs developed was zinc
where consumption had long beer
following a rising trend. Unlike
copper and lead, for which domestic
mine production is deficient, zint
suffers rather from inadequate
smelter capacity. Additional smeltel
capacity of some 100000 tons an
nually is being brought into op
Grafton this year, and 1912 addition
may duplicate the 1941 gain.
Producers stocks have been vlr
tually nil since the first of the year
while consumers stocks have beel
(see METALS, Page, E-30