CMRA 2010 Forum: All Eyes on Copper

Throughout 2010, the price of copper has fluctuated, but has essentially stayed in a very lofty range well above its historic average.

Speakers at the 2010 China Nonferrous Metals Industry Association Recycling Branch (CMRA) forum in Ningbo, China, had differing opinions as to what extent the lofty pricing can continue into 2011.

Mike Jackson, director of nonferrous sales at Commercial Metals Co., Irving, Texas, said he foresees strong copper demand continuing and suppliers straining to keep up in 2011.
Jackson said that although many economies in the developed world are “stuttering and uncertain,” growth in Asia will continue to strain supply. “There is a global supply deficit projected” in 2011, he commented.

The scenario leads Jackson to believe that copper pricing will average $4.10 per pound when the highs and the lows are averaged out at the end of 2011.

Michael Lion, Australia-based chairman and board director of Sims Metal Management, said he is “bullish for the most part” on nonferrous metals and that “copper’s strength is tied to fundamentals in the market.”

Lion cited China’s ongoing growth and hunger for copper as the key fundamental on the demand side and the lack of new mining and production capacity investment in the 1980s and 1990s as the key factor on the supply side.

Industry analyst Ming Feng of Shenzhen, China-based China International Futures Co. Ltd., said the strength in copper pricing has been underpinned by economic growth in Asia and, up until late 2008, healthy economies in the rest of the world.

He noted, though, that “the economy is not picking up fast” in the United States” and the job market in the U.S. “is not dynamic enough.” Ming added, however, “the U.S. economy has the ability of self-repairing.”

Demand in China may also have reached a peak, said Ming. “The pace of economic growth will slow down in China” under the 12th Five-Year Plan, he commented. Also, “the real rate of [infrastructure and real estate] investment started slowing down in 2009 [and] raw material demand has slowed down for most commodities except oil.”

“The [weakness of] the U.S. dollar is the main driver of the current copper market,” said Ming.” He concluded by saying copper may hit a medium-term trough in pricing as the recent boom winds down, but that in the long-term, market fundamentals will keep copper trading at a high range beyond where it was before the economies of China and other nations roared to life.

The CMRA 10th Secondary Metals International Forum was Nov. 7-9 at the Shangri-La Hotel Ningbo in China.