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Metals and Mining Industry

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Scott Redmond

Prices of the material are an important component to the industry. In the long run, price cures price. Said another way, high prices encourage exploration and production from new sources. As supply comes on line the balace between supply and demand push prices lower.

[edit] Price Run-Up

In the last few years many metals and mining companies have seen a run up in the prices of the precious/non-precious metals that they sell. This has been due to a number of factors such as the weakening dollar, concerns about inflation, strong demand for commodities in the emerging markets and the global infrastructure boom.

[edit] The "J curve"

companies frequently enter into longer term contracts with buyers. The contracts set a price for future transactions regardless of future changes. The actually sweet spot for a company is when the contracts are set when prices are high and then gradually fall. So the company sells low cost metals at higher prices.

[edit] Related Companies

Alcoa (AA) Allegheny Technologies (ATI) BHP Billiton (BHP) Cameco (CCJ) Freeport-McMoRan Copper & Gold (FCX) Teck Cominco (TCK) Cleveland-Cliffs (CLF)Mechel Steel Group OAO (MTL) Cia Vale do Rio Doce (RIO) Rio Tinto (RTP) Aluminum Corporation of China (ACH)

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