Copper Seeing Bounce as China Revalues Currency

The following are the opening remarks from Marc Natan, president of the BIR’s Non-Ferrous Metals Division.

Copper wishes you a happy holiday! Over this summer period, our monthly newsletter will perhaps enjoy a more limited success than normal since it seems unlikely to be read either at the seaside or in the countryside or mountains. For the brave or for those unlucky enough to have to remain in the office, you don’t need me to tell you that copper has beaten its all-time record once again, or that the other metals are struggling to match this steep increase.

Just when nobody was expecting it, the Chinese government has decided to revalue the Yuan; the immediate effect was a rise in Chinese imports and a hike in prices despite the small scale of the increase. The statistics are beginning to race for all primary and secondary raw materials. China’s imports of raw recycled copper alloy products should exceed 4.5 million metric tons this year, although we don’t know really know what copper content we are talking about.

Engines, cables and mixed metals remain a priority for buyers although all grades with a copper content of 90 percent or above are keenly sought. Up until 2004, the copper content of raw materials was not exceeding 23 percent, but this percentage should increase to upwards of 30 percent this year with a record 1.35 million metric tons of copper derived from valuable scrap materials.

Our friends in India are not on holiday and are providing the Chinese with head-on competition for available lots, with both parties offering best prices for quick delivery. Should we be worried about a trend reversal? Without doubt - but when is it likely to happen?

Confronted by these economic giants with their ferocious appetites for metal, European consumers are on holiday and have shut down their yards either in part or completely. The contrast is striking although we shouldn’t necessarily take our lead from what happens elsewhere.

The full report, including analysis by various nonferrous traders in different regions of the world, is available to members of the BIR.

In addition to becoming members, the BIR will be holding its convention in Milan, Italy Oct. 24-25. For more information on the association contact the association at bir@bir.org.