Scrap copper prices stay strong
Volatility in the market may signal changes
ahead for scrap copper recyclers.
“I don’t see how prices are
supported at the current level,” said John Mothersole,
senior economist for Global Insight Inc. Mothersole tracks
copper for the research firm in Washington D.C. “There’s
going to be a change in the market,” Mothersole said.
Prices for copper hit $8,700 a metric ton
during May and fell below $8,000 within a couple of days.
The markets quickly rebounded above $8,000. “It suggests
that even the copper bulls in the market are getting a little
nervous given price levels today. There really isn’t
underlying support for these fantastic price levels,”
What does this mean for scrap copper recyclers?
The price for new copper on the international exchanges was
up about 150 percent year over year in May. Scrap copper prices
tend to move almost in lock step with copper prices. “The
extraordinary price increases that we’ve seen in copper
are fully reflected in scrap,” Mothersole said.
“Copper market fundamentals are very
good right now in the sense that inventory is low and we have
seen good consumption growth,” Production continues
to increase to meet global demand. “Although fundamentals
are good, they’re not as good as what would be suggested
by the fantastic run in prices that we’ve seen,”
Economic models show a small surplus of
copper this year, which would suggest a building of inventory,
Mothersole said. “I just don’t see how price levels
continue to be supported at this level, if in fact we begin
to see an inventory build,” Mothersole said.