Document oBzXxYk2QKp6KRq4Qz5M56Gg

-i - LIA 16309 3 i THE CUnSEXT 1AD K1ROT* Dr. Joph Zlacwrajn Eiitor-ln-Chiaf Dally Natal Reporter Bo fork, K.T. I find myself In a rather embarrassing position today. I M to dieeuss a soAjdngly ncn-existant situation--the 3ovd aarket. A aarket presupposes a free interlay between supply and demand, with prlcaa re flecting the relationship between these two fetters. Today, however, tha Ooramoant makes tha Barkvt, It tails eonsunera hoer such lead Umj way usa and it tails producers what prica thay aay charge. Befora this yaar is over, I have a hunch that tha Gcverroent will tall conauaers to what usa tha/ aay put tha lead, and tall producers to whoa they aay sail and X know that oary producer* and consueers feel that lead need not eoas under tha same strict control as tha Ocraraaent will impose on copper, aludcua and steal. Fhat they overlook is the fact that lead is a member of tha natal family and If there is an epedaaic of Goveraaant "cootrolltia,* if I way coin such a word. If several natal a fall prey to it, tha others are hardly likely to escape. I recall last year, when lead appeared to toe tha ugly duckling in tha natal group, Lead appeared to be Isrune to tha panicky buying that ta^-ed in the copper and sine Markets, and there were cany <*io believed that this ioBunity would continue indefinitely, you oa/ recall that while the prices of copper and sine were noving up, the price of lead was going dean l last year. On June 23, two days before tha Korean war, tha prica of lead dipped fix* 12 cants to 11J cents, and on June 28, three days after tha ? i tart of tha war, the prica dropped another ) cent to 11 cants. At tha t lr tine when tie price of lead dropped to 11J centa a pound, the prlee of sine noved up to 15 cents. It took but cne care rise to bring the price of sire ii to 17J cents, whereas it took 7 price advances fro* the 11 cents level to bring lead up to 17 cants S pound. It la true that lead lagged behind oop- per and sine, but it caught up with tha others eventually. Lead lagged behind the others last year because of tha large oatold stocks that producers carried over fro* 19L9, and bacauaa tha Muni-- tions Board gave the aarket a swift kick in what, in huaans, ia referred to as the lower part of the anatomy, hy discontinuing to buy load for the stockpile. That threatened the aetal aarket with a recurring ncothly sur plus of sons 29,000 tone, of which 16,000 tana had bean going into the stockpile. The situation caused dleaay aacng producers and soaathing abort of elation aacng cooaunars. That's why the price dropped to 11 oeote pound. To sake aatters worse, foreign countries with devalued ourrenciae were diapli^ a good portion of their lead oo tha doenrtlc market to get dollar*. Presented at tha 23rd Annual Heating, Lead Industries Association Nay 17-15, 1951, New fork, I. T. iljyua wpwisjsuiwii.. mmr L IA16310 i7r | -* - This, than, vat tha la*4 ploture at the tlaa the foraan war broke out. Consumers of copper, slna and alvaelnua were already veil advanoad on their buying eprea, and It didn't taka long bafore lead consumers joined tlia parade. The carn-.ua*re of lead products began stepping up their demands because of the fears of shortages, fears of Oovameant restraints on ooosisaptloe and lnrsntories and principally because of the fear of inflatino. is long as lead produesrs had large stocks to drear on, they oould - allay those fears by sailing freely, narking up the price, of oourec, as they dipped into their reserres. But whan their stocks were down to a lew lewcl, they, too, had to put a check-rein on their sales. But as soon as it becaaa eora difficult to get lead, the more anxious becaee consumers to build up their inventrlee. j Back i ipril 1"^, r"---rc nit purnrtly rtft -- loping their Inventories at 90,0V) toes, knowing that the producers were osrrying a stock of 211,000 tons. By February 19S1, however, lead eonsuaers had boosted their inventories to 126,000 tons, an Increase of close to 1*0 percent, while the stocks in the hands of producers were down to 131,000 tons, a deoreasa of 36 .percent, Jn other words, there has been a shifting of the stocks fron the hands of ths proaucars to those of eonsuaers. Q i w The Oorerment apparently alec thought that lead was going to re-- aein iaaune to the shortages that were felt in other metals, When ths KPA issued its first awtal inventory order in Septeaber of last year, laad was not included in that order. And when in February of this year, the X?L began to control laad, it permitted eonsuaers to carry a 60-day inventory, which was acre than they had been carrying. Seeing the cutbacks in civil ian consumption and compulsory set-asides for BO ratings in other netals, aarty lead eonsuaers put on stean to lnereaso their inventories, end others turned to the use of lead as a substitute. As you know, ths buying binge was on in real earnest. The Oovemment suddenly realised that there sight not be enough lead for its defense prograa, and therefor* ordered e cutback in civilian consuoption and United consumers' Inventories to a 3C~d*y at^ply. This brir^t us up to ths present, and ths question now is Whers do we go free here!" * Veil, that certainly ia the |6I| question, and no one should be naive enough to look to Washington for set anr-wr, because there sanfualoa reigns supreme. i I think that you will agree with me that ever since Washington Stepped into the picture, there has been oarfcet chaos and confusion. To* will recall that when the freese regulation was issued an January 26, it was supposed to be a mors stop-gap, a quick!#, ac to apeak. It quickly etopped tbs flow of foreign metals to ths United States, and it has created greater gaps between prioes for ths same motal than ejdsted before ths frees*. `t LIM6311 gppr* '-ill'll 'fi wrr ' *. .-- i -3 - The present price of 1*04, at 17 cents a pound, la the chsspeet la tha world. Oar Gcrerruaent caa corpsl tha doaeavla producers to tall at that price, and It can ceepel coneuaera to limit their uaa of tha artalj twt lte legal ara cannot reach out and ccapel producer* and consumer* la othar part* of tha world to do likewise, What's been tha result? foreign lead, instead of cocing to tb* 0. 3., la going to amrketa la othar parte of tha world, wnere tha prices ara higher. E i Last jrttr, for exaapla, oar not Import* of load In all forme eweraged L3,h00 too* a month. If this /ear*i li^orts inrtp 20,000 toog a month, wa will ba doing wall. la tharw any good reason why foreign laad eceoantrates or refined lead should be offered for sale In the domestic market, whan wa lapoe* an laport duty on than, ewen though beginning on June 6 tha tapart duties will be cut by 50 percent as * result of the Torquay agreement? t Let ee rtate ay position clearly. I ae la fewer of protecting ; the domestic rdring Industry with adequate tariffs against foreign Ke> petition, w:iac there la danger of such competition. Bat even the eost : ardent protectionist can hardly claim that any such danger exists at pre sent. The logical thing, therefore, would seen to be to suspend the la-- port duties cn lead, even though they have bean reduced, but suspend than with adequate safeguards, as was dona In the ease of copper, so that la case there Is e sharp drop In price, tha duties would ba reiaposed suto- aatlcally within a definite period. rsrelga load producers hare bees getting as each as 2B cents a pound In Japan and between 22 and 23 cents a p:und in South America and a: V, I 26 cants on Da Continent, without haring to absorb any duty at all. Wty should they try to sell In the domestic market at 17 cents a powd? Our Washington authorities would do well to take a realistic ? lew of the world price situation. If foreign lead la to be attracted to the Dnlted States, we must either free the domestic market from prloe control, or else hare tha Qorernaent take over the importation of foreign laad at whatever pries It hat to pay and resell this lead to domestic consumers at tha celling price and pocket the loss. Of course, that would constitute a subsidy for foreign lead producers, which would not sit well with the d.-nestle rining industry. But the Oowemment can't escape this Issue by burying Its head in the sand, ostrich-wise, to avoid the approach- lag stern. T: Our Oowemment Is carrying on negotiations with some of tbs world producers of lead, sine and copper. In the hope of rewiring the Combined Rev kata rials Board that functioned during World Tar II. X hare ay doubts whether tbs countries that produos the metals we need, want world aUooe- t. I tions and prloe controls. ; f: r ss 9 1 '_ ll I cannot help but feel that the longer our Oovemeent pursuits Its unrealistic policy of keeping our lead sarket undtr artificial prlos eoj> trol while the rest of the world enjoys a fros naricet, the snaller will our laporte beoose and tba jroat.tr our laad shortage, and don't forest that w rely on laporta to fumiah approxlaately one-third of our requireaeata. We oaa't expect such laad fro* our dosestie n&nee, which laat yoer . produead an an average of 36,000 tons ~nta. Pith tha prioo whars it is, this year'a averse* output nay be stepped up to 36,600 tons a sonth. Yt ay tt as such laad f roa scrap this year as we did last ysar, say about 33,000 tons a south, and if ws suspend our laport duties entirely and rtisa tbs donastie prloe 1ml our laporta aay sveru<s this ysar, 20,000 tons a sonth. This would (lvs u s a recurring supply of about 90,000 tans s sonth. During tha second half of last year our civilian consentloo averaged 119,000 tons a sonth, and It cartalnly would bo *t Mgh today, if. tha Oovemaent had not stepped la and out back tha civilian ccns'nption. It had to taka this drastic action because you aisply can't seat a civilian dsaand of 119,000 tons and Oovemnsnt needs, I don't know hoe large, with a aoothly supply of 90,000 tons, especially when prooucers no longer have stocks to drier on. The civilian coca -option has bean cut by about 30 pejw cent. New, if you have a acuthly supply of 90,000 tone and tha OoverraaxA Is pensittlrg civilian Industry to consent 82,700 Iocs a sonth, thsra la llttla left over for defense. I therefore believe th.it tha km will find that retting aside 20 percent of ths dosestie production for defense will not be enough. I doubt whether 30 percent will be enough, is tbs defense progrea is stepped up, acre drastic civilian cutbacks nay have to be sade| and when that happens tha *?l aay have no other alternative but to pvt lead isader the CKP. fro* where I ait, and It's not an ivory tcwvr, I ean *ee little hope for relief in tha lead supply situation for souths to eons, certainly not for the balance of the ye^r. It's not a pleasant prospect to floe, but we aay as well be realistic about It. The dlsappolntweste will than not be as great. | f f | l i { $ wu p ^ W W p iirir 'i'iiiii' i i i i. iuu- HBIffy^W M .ny i' lbJ i `esraswewiBi mvmmjffwuA jpi v i,,mimxpayitspijj ". yiipp^pwo.. iimmmMUUhrn,-: t