The Balancing Act
Matt Levine, co-moderator of ISRI’s 1999 Copper Roundtable and a broker with Leonard Levine Metals Corp., Northbrook, Ill., noted that attendees “looked 15 cents happier” than when he last saw them at the ISRI National Convention in Orlando.
The reaction of copper traders and processors might well be happiness combined with surprise. As copper was wallowing closer to the 60 cents per pound level, there was little sentiment in early 1999 that the market was headed upward anytime soon. Most analysts saw long-term overcapacity issues that were also coupled with a slackening in demand in industrial nations throughout Asia and Europe.
So why did copper bounce back to the 80 cents range on the COMEX exchange? Paul Dewison, managing director of Metalica Ltd., Suffolk, U.K., offered his theories to ISRI Roundtable attendees.
Dewison cited several factors to feel bullish about copper, including:
• Market balance, with mining and smelting capacity scaled back to move the annual production of copper from a sizable surplus to a pending deficit.
• Market growth, with escalating demand particularly in Asia and Europe after two or more down years
• Consolidation in the industry, causing fewer mining and smelting companies fighting to put product on the market.
Dewison noted that North America had basically carried what copper consumption market there was in 1998 and the first half of 1999.