BIR Congress: All Eyes on Copper

For the Nonferrous Division Meeting at the 2011 Bureau of International Recycling (BIR) World Recycling Congress, division president Robert Stein of Alter Trading, St. Louis, asked guest speakers to consider whether copper has become “the next gold.”

Stein pointed to “the startling way in which this metal has displayed its resilience to economic disaster,” adding, “No industrialized economy on Earth can do without it; it is a vital ingredient in infrastructural growth, and it attracts attention almost unknown among its base metal counterparts.”

Beyond its industrial demand, Stein said of copper, “The commodity has been financialized to a much higher degree than ever as the investment community continues to use the metal as a source of leveraged speculation.”

Guest speaker Christian Schirmeister of J.P. Morgan Metals, London, noted that copper inventories have been building in China. “It will take some time, but these stocks will find their ways to consumers,” he remarked.

Schirmeister did not express alarm about the increased use of ETFs (exchange-traded funds) as a way to invest in copper, and said the “financial sector still does not replace underlying physical supply and demand” as the main factors in copper pricing.

Speaker Glen Gross of Wimco Metals, Pittsburgh, was not as convinced, referring to fund investors in the copper market as “ghosts that haunt and influence our daily business.” Said Gross, “They are the unseen financial flows that regularly rocket and torpedo our markets. Today, because of these ghosts, I find that markets act the opposite of what our brains tell us. Managing risk seems to consume an inordinate amount of our time, and has created the most challenges.”

Guest speaker Miguel Garcia of Spain’s LaFarga Lacambra gave the point of view of a red metal scrap consumer. “The markets for raw materials follow a cyclical model based on supply and demand,” he commented. “In the 21st century, the sharp increase in demand had as an effect a tripling of the prices of [red] metals between 2002 and 2008.”

Recyclers and scrap consumers are poised to benefit from the “scarcity of natural resources,” said Garcia. “The recycling of raw materials will become an important industrial activity. A world market for ‘green’ products and services is expected to double [in revenue] from 2011 to 2020.”

The 2011 BIR World Recycling Convention was May 23-25 in Singapore.