Metal Producers Feel Pinch Of Rising Fuel Costs

[skids]

Current near-record metal prices are largely the result of the supply side's slower-than-expected reaction to a China-led demand surge.

While the consensus is for prices to ease back toward long-term trends as suppliers catch up with flattening demand growth, the slow pace of the process may continue to surprise as costs of materials, labor and energy restrict expansion.

As sophisticated energy users, most major metal producers are insulated from day-to-day price fluctuations by long-term contracts and hedging, while current high metal prices soften the blow on their bottom lines.

But recent reports from producers highlight their exposure to the hydrocarbon squeeze, which has seen U.S. natural gas prices, for example, more than double since June where they are expected to stay into next year, according to Barclays Capital.

http://sg.biz.yahoo.com/051028/15/3w0wx.html

[phantom power]

1. Everything we make, everything we do...

[Dogmudgeon]

2. That pinch is the first phase of what will be a death grip

I don't know how we're going to get around the problem of providing energy for metal processing without massive re-tooling and conversion to some kind of electricity-based technology -- nuclear or non-nuclear, whatever we can develop in the next decade.

The problem is we just aren't doing it. We aren't doing diddly. The price will be high.

--p!