While many of the attendees in the packed room expressed the opinion that copper markets had peaked, the three speakers took a far more bullish outlook on where copper markets would be heading over the next nine months of the year.
The speakers at the session, for the most part, expressed a very bullish outlook for copper scrap over the next several quarters. The consensus seemed to be that copper scrap was likely to continue its upward climb. The main reason for their upbeat analysis is the steady to strong demand for the material, while new capacity is still several years away from causing any improved balance.
Robert Loewen, with Robert J. Loewen & Associates, Scottsdale, Ariz., noted that, in his opinion, any peak for copper was perhaps 18 months away. “I don’t see a risk at $2.50 right now. It should climb up from here,” he noted. He added that supply constraints will limit the possibility of new supply coming on stream to help soften the upward climb of copper.
Tim Strelitz, California Metal-X, representing the domestic copper consuming side, also acknowledged that scrap copper markets were continuing to strengthen, leaving the domestic scrap copper industry at a major disadvantage. While pointing out the strong buying by Chinese interests, Strelitz did note that there appeared to be a lot of depth to this market. “It is still all about China. There are lots of dynamics for business.”
Meanwhile, domestic consumers are running strong schedules, Strelitz added.
John Gross, another speaker, noted that there was a rising trend for scrap copper. He noted that this is the fifth bull market for copper in the last 30 years.
What has been the most surprising trend for the market has been the fact that the market has moved almost straight up over the past year. “In my mind there is a significant difference in the price and fundamentals of the market, he adds.
Herb Black, with American Iron & Metal, Montreal,expressed the most bullish outlook for copper. “The market can’t go down very much.” He points to very strong fundamentals that will likely keep the metal fairly buoyant.
While acknowledging the strength of copper, Strelitz pointed out what he feels is some “non-fundamental” issues that are affecting the copper market, including, what he feels, is manipulation of copper by China.
In following up theses remarks, Strelitz said that he sees Chinese interests backing off the market a little bit, giving the domestic side an opportunity to become more active in the metal. What this means is that for domestic consumers will have to become very aggressive to obtain the material needed to feed their operations.
In their closing remarks, all three speakers noted that with the strong demand and new capacity still a bit away the market is “one step away from a sharp run up,” one speaker noted.
“No one is sitting on serious tonnage, Gross notes. “People are keeping minimum inventories on hand.” As a cautionary note, he also cast the warning for scrap dealers to not speculate the market.
Most intriguing was that the bullish outlook of the three speakers diverged with the initial outlook for many of the attendees at the crowded session. Before the session began by a show of hands attendees were asked whether or not the copper scrap market had more room to run. Only a small handful of people felt that copper scrap, which already has been on a significant run, had more room to run.
After hearing the bullish outlook, some of the naysayers might be willing to change their outlook.