In what appears to be a much-anticipated tradition at ISRI’s Annual Convention, an overflow crowd of attendees sat in to hear what three panelists had to say about the copper market.
The three speakers -- Tim Strelitz, California Metal-X, Herb Black, American Iron & Metal, and Keith Gwozdz, metals trader at Man Financial – gave attendees a dose of the what could be in store for the highly volatile commodity.
In a departure from many traditional presentations given at trade shows, the three speakers, along with engaged in a more conversational approach. Michael Friedman, Scrap and Waste, Louisville, KY, again took the mantle to moderate and encourage the three disparate speakers from discussing what some of the driving forces for the grades are.
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The result was a 90 minute discussion about what and where the copper markets are headed.
Strelitz and Black reiterated that over the past several years scrap copper markets have been swinging sharply as Chinese buyers send out mixed signals about whether or not they are coming into the market in a strong way. At the same time, all three speakers noted that commodity funds continued to play a very active role in the commodity, which has resulted in prices climbing.
Although careful not to set prices, several of the speakers said that prices could far surpass the $4.25 level in the foreseeable future.
"I am very bullish on copper now," said Strelitz.
Black followed up, saying, "Markets are going to keep climbing. My advice is ‘Don’t go short in any of these markets."
Further, Black said that as far as he sees it the risk for scrap copper is on the upside.
Reflecting the growing role of commodity funds, Keith Gwozds, with Man Financial, noted that the interest in base metals such as copper have growing significantly over the past seven years, and estimated that allocations in this sector have climbed by close to 500 percent since 2000.
Even with this tremendous growth, Gwozds added that this area still makes up a very small part of the overall investment world, and further increased could continue for the foreseeable future.
Adding to the more bullish sentiment in the market, there is expected to be a continued shortage of available copper through the rest of the year, which should keep inventories low and demand in strong balance.
However, Gwozds pointed out that new capacity should alleviate some of these problems in 2008, which could help push down prices.
"We are in the best of times," Black added.
The improvement in the grade is coming while the U.S. economy, which once used to be the key driver for the grade, has taken a backseat to some of the more dynamic economies in Asia.