Experts discuss record hike in copper prices
Historically high copper prices could rise even more in the coming years due to strong manufacturing demand, an expert predicts.
During an April 29 session at the Institute of Scrap Recycling Industries’ 2021 virtual convention, market experts spoke about soaring copper prices, Chinese import policies and the possible future of the demand for copper. Copper is a precious metal recovered from consumer electronics.
The ISRI discussion came as copper prices hit record highs. On the day of the session, the price was $ 4.53 a pound, up more than 90% from a year earlier, according to the London Metal Exchange. As of Tuesday, May 19, the spot price was $ 4.75 per pound.
“That’s quite a trick,” said Chris Lewon, Utah Metal Works vice president and session moderator. “I don’t think anyone could have predicted this last year amid COVID shutdowns.”
During his presentation, Jason Schenker, President of Prestige Economics and President of the Futurist Institute, explained that the price increase is the result of global manufacturing activity, which is at near record levels. During COVID-19, unable to spend as much on travel and services, consumers bought more physical goods, boosting demand. At the same time, interest rates are close to zero.
On the supply side, he noted that mines have been limited in production due to downsizing from COVID-19 and infections among employees.
“We’re probably going to see prices continue to stay high and probably increase over the next couple of years,” he said.
Agreeing that the medium to long term outlook for the red metal looks bright, Bloomberg commodities columnist David Fickling argued in an article published yesterday that recent price increases must be paused.
Daniel Fischer, vice president of Kataman Metals, explained how China’s import policies have affected markets. Fischer’s work focuses on the non-ferrous scrap metal trade in Latin America, Asia and Europe.
China’s national sword campaign halted shipments of scrap metal to the country three years ago. When this happened, shipments of scrap metal containing mixed metals and non-metallic materials began to flow to Malaysia, Pakistan, Thailand, India and other countries, and companies from these countries are buying always these qualities, noted Fischer.
In the meantime, China has reopened the doors to high-quality scrap metal that meets its specifications, which ban non-metallic products such as paint, enamel, plastics and other materials that the country considers harmful to the environment. the environment when melted, Fischer mentioned. Many countries, including most of Latin America, the UK, and many US suppliers, cannot always meet specifications, he said.
That being said, China, with its enormous manufacturing capacity, is still a driving force in the market, Fischer noted.
“Maybe we weren’t able to come back with both feet, but it seems most of us who trade copper have at least one foot in the Chinese pool,” he said. declared.
And despite the strict import specifications, there are still Chinese companies willing to take risks. “The penalties for non-compliant cargo in China are terrifying, but every day you have customers who are willing to take that risk,” Fischer said.
And he still sees a north-south divide, where companies in northern China, closer to the capital of Beijing, are more cautious and those in southern China, further away from central government authorities, tend to be. more cavalier and willing to do so. push the envelope, said Fischer.