Fast-food outlets with their stainless counters help to push up the prices of Canadian nickel

Hamburger sales in Japan are keeping a lot of Canadian miners on the job. Nickel prices have gone through the roof, and Canada's nickel mines are rich for a change. Inco Ltd., the world's largest nickel producer, and Falconbridge Ltd., Canada's No. 2 producer, are enjoying sales and profits they haven't seen for a decade.

``About 55 percent of nickel goes to stainless steel makers in Europe, the United States, and Japan, and demand for stainless steel has been strong, especially in Japan,'' says David Allen of Inco.

One of the biggest increases for demand in stainless steel has been for fast-food outlets, Mr. Allen says. ``You look behind the counter at a McDonald's, and it is all stainless steel. And fast-food outlets have been growing in Japan.''

The numbers tell the story. A year ago nickel prices were $1.60 a pound. On March 3, spot nickel prices were $5.80 a pound. That is good news for Inco. Analysts say the company breaks even when nickel is $1.80 a pound - the rest is gravy.

It shows in Inco's profits. In its 1987 figures reported last month, Inco posted a profit of $125 million, compared with just $177,000 in 1986.

Inco, a contraction of the old name International Nickel, is by far the world's largest nickel producer, with 34 percent of the market outside communist countries. Canada is the world's largest nickel producer; all of it comes from the Sudbury area in northern Ontario. Last year Inco sold 477 million pounds of nickel, a sales level it hadn't seen in a decade, up from 384 million pounds in 1986. Demand was so strong that Inco actually had to buy 18 million pounds on the London Metal Exchange to help meet demand.

And a disaster this month added to that demand by cutting supply. An earthquake in Indonesia washed out a section of a canal feeding Inco's hydroelectric generator there. That caused a two-week shutdown of its nickel smelter, which could mean a loss of 2.5 million pounds of nickel, most of it bound for Japan.

The average price Inco received for its metal in 1986 was $1.94; it was $2.18 in 1987, and $3 in the first quarter of this year, although official figures are not out yet. Sales are running at record levels, but the company does not expect to keep up with last year's record pace.

Some analysts do not feel the stock price will hold up, either. Rising profits and nickel prices have pushed Inco's stock from a low of $11.75 last year to $23.75 in March. ``We're suggesting selling the metals, including Inco,'' says a Toronto institutional broker. ``This can't go on forever. Metals are at the end of the cycle.''

There have been suggestions that Inco will sell some equity and raise easy cash with its stock at these record levels, as the smaller mining firm Falconbridge has done. But Inco president Donald Phillips says he wants to reward shareholders who have stuck with the company, and he won't dilute the stock. ``We have absolutely no intentions of doing an equity issue,'' Mr. Phillips says.

And there could be labor trouble. Contract talks for Inco's Sudbury miners come up in May, and they want a piece of the action. ``The people who do the dirty work should get a larger share of the pie,'' says Dave Campbell, president of the Steelworkers local. The union is angry because about two weeks ago its 6,000 members received a $70 (Canadian) bonus because of higher nickel prices. But nonunionized office workers and supervisors were given bonuses ranging from C$300 to C$1,500. The union will raise that issue in its talks for higher pay.