ISRI CONVENTION: Strain on Commodity Supplies Showing

The strain on global copper supply could remain as a trend to spur higher prices, although the good news is tempered by accompanying global supply shortages of energy and grains.

The growth of East Asia’s and South Asia’s economies is putting a genuine strain on the supplies of many commodities, according to David Hightower, a commodities analyst who spoke at the Copper Spotlight session at the ISRI (Institute of Scrap Recycling Industries Inc.) Annual Convention, held in late April in Las Vegas.

“In our opinion, there hasn’t been a more bullish market for commodities in the last 28 years,” Hightower, editor of the Hightower Report, Chicago, told attendees.

The pricing pressure affecting copper and other metals—as well as energy and food commodities—comes from some three billion of the Earth’s people who are straining the demand side as globalization and free trade brings changes the economies of once underdeveloped nations.

Hightower and his research associates see that demand on oil, metals and food crops fueling a spiral of higher commodity prices and inflation. “When you have tightness of supply, those are classic building blocks for inflation,” he commented.

Concerning copper, Hightower noted that even the high prices reached in March for red metals may not be the peak of the cycle, as many investment fund managers are “not completely turned on to copper.”

In the near-term, Hightower remarked, “I see a run-up to $1.48 to $1.50 in the September to October time frame.” That forecast is predicated on Chinese metals producers returning to buy in volumes similar to what was seen in late 2003.

“When China shows itself back in the marketplace . . . we’ll see the market put itself back into its bullish fundamentals.”

The expected ceiling in copper prices will come in form of increased mine production, which is already in the beginning stages of ramping up, according to Hightower.