Manufacturers are already faced with a perfect storm of supply shortage and booming demand from relentlessly growing economies, chiefly China and India, which have sent commodities prices soaring.

Gold is at its highest price in a quarter of a century; copper prices have tripled within the last six years and zinc prices are at record levels.

Metals climbed higher again last week on commodities exchanges following an IMF forecast that world economic growth, led by China and India, would increase again this year leading to higher demand for base metals.

Some commentators have even begun referring to a supercycle", set to sustain the price gains into the foreseeable future. A report by investment bank UBS last week suggested that, despite doubling in value over the last two years, base metals are, on average, worth less than half of their ?real value" . . . adjusted for inflation . . . in 1974.

Deutsche Bank analyst Peter Richardson said economic fundamentals to sustain future increases are still present.

Rising global industrial production and continued supply constraints against the backdrop of low inventory levels is having a major impact on price levels, " he said.

Moreover, Richardson said there is a strengthening market conviction that prices will remain high for considerably longer than was anticipated earlier in the cycle".

For those companies affected, however, there is nothing ?super" about this current cycle. Mark McCauley, director of Ibec's Irish Engineering Enterprises Federation, said many Irish companies are hurting because of the massive rise in raw materials prices.

EEF members include Irish and multinational engineering firms ranging from automotive components makers such as ABB to consumer goods producers such as Glen Dimplex. The increase in metals prices have hit Irish firms across the board, he said. ?It has been a huge issue for the last couple of years."

McCauley said many EEF members had already been grappling with high steel prices, which surged ahead in 2004 and have remained a problem since then, but now manufacturers are feeling the squeeze from all sides.

With energy costs also on the rise, the spike in commodity prices is a threat to the economic viability of some businesses.

It has been, for some companies, the difference between making a loss and making a profit, " said McCauley.

Bernard Shanley, managing director of Galco Steel, said his company has been forced to pass on the costs to its customers and has raised the prices of its galvanised steel products by up to 35%. ?That's what we're looking to charge our customers to try and keep our head above water and that's based on zinc prices a month ago, " he said.

The company's products have been used in many of Ireland's largest construction projects, including the redevelopment of Croke Park, and the bulk of its customers are in construction and engineering.

Shanley said there is no sign of any let-up in the price increases in the near future.

?There's nothing to tell me that prices are going to drop."

Zinc has increased in value by over 60% since the beginning of January, reaching an all time high of $3,200 a tonne on the London Metal Exchange last week.

Galco had pre-tax profit of 3.2m on turnover of 7.8m in the year to May 2005 but conditions have changed dramatically since then. Shanley said the company's margins are under pressure as it grapples with the massive increase in costs.

In many cases Galco is fulfilling fixed-price contracts for customers which were signed a number of months ago, leaving the company no option but to swallow the higher metals prices.

We've absorbed a lot of zinc costs. We find it difficult to pass on the full increase, " said Shanley.

While Galco, like many companies in the present climate, is resigned to the fact that it is at the mercy of the immutable laws of supply and demand, there is a growing sense that speculators, as well as rapidly industrialising nations, are fuelling the current boom. Ibec's Mark McCauley said there is a feeling that real demand is not driving the prices as much as commodities traders".

That view does have its supporters. Serial entrepreneur John Teeling, whose current investments include exploration companies such as Minco and PanAndean, which seek to mine base metals, said the use of phrases such as supercycle" should immediately ring alarm bells.

The world doesn't change that much. . . I hate people using the 'new paradigm'. I think that's a sure sign we're all about to fall into a precipice, " he said.

Teeling said commodity prices were getting to the level where investors needed to ask themselves ?whether you're in this so-called supercycle or whether it's a bubble".

Record metal prices reveal new profit vein for Irish mining firms

IRELAND'S three zinc mines are reaping the bene"ts of record metal prices which could potentially add tens of millions of euro to earnings this year at Tara, Galmoy and Lisheen mines.

The potential upside for the miners is substantial, according to projections by Boliden, the Swedish mining company that owns Tara. Tara is responsible for 57% of Boliden's annual zinc production.

Figures published in Boliden's annual report, distributed to shareholders in the last fortnight, estimate the company would gain 54.5m if the average price of zinc increased by more than 10% over its level during the fourth quarter of 2005.

At that stage zinc was trading at $1,681 per tonne but has increased far more than the 10% envisaged by Boliden since then. Zinc prices touched $3,200 last week on the London Metals Exchange. Over the first quarter of this year zinc has averaged more than $2,200 per tonne, a 30% increase on average prices during the preceding quarters.

Boliden chief executive Jan Johannson said the current price is sustainable. Production constraints and massive demand from China, India and Brazil mean it could take many years for prices to reach a balance. . . In Europe today it's almost impossible to buy zinc, " he said.

Karl Axel Waplan, chief executive of Galmoy Mine's parent company Lundin, said the company would spend up to 4m on exploration in Ireland this year as it seeks to up production to take advantage of the massive demand for zinc.

The fundamentals are there for a high price, " he said.

Meanwhile, the Health and Safety Authority has launched an investigation into an explosion in which a Galmoy mine worker lost his right hand. Conor Brophy Sudden explosion in uranium dealing as oil goes into meltdown IT'Smay not be everyone's idea of the perfect alternative energy source, but nuclear power has been fast making a comeback recently.

Speculators have been cashing in on the increase in reactor construction around the world, especially in China, that is sending uranium prices through the roof.

The spot price of the radioactive metal is over $40 a pound at present, double its level this time last year.

According to the World Nuclear Association, a group which represents mining and nuclear energy companies globally, demand for uranium will increase from 90 million pounds a year to more than 160 million pounds to meet the requirements of the nuclear reactors that are now planned or already under construction.

The question now is whether mining companies can rise to the occasion and meet the surge in global demand, or whether the supply shortages that have contributed to spikes in the prices of metals such as zinc, copper and nickel will have the same effect on the price of their radioactive cousin.

Peter Farmer, chief executive of Canadian mining company Denison, one of the world's largest producers of uranium, told shareholders at his company's annual general meeting last week that it will be dif"cult to meet the demand.

We've really got to step up the process, the speed with which we can "nd uranium and the speed with which we can get a licence to operate. It's not like getting up in the morning and frying eggs for breakfast. Production is not that easy, " Farmer said.