Copper scrap market could face challenges in the short term

Author: Paul Ploumis
05 May 2015 Last updated at 06:05:53 GMT
VANCOUVER (Scrap Monster): The Spotlight on Copper session held during the recently concluded 2015 ISRI Convention & Exposition at Vancouver discussed various challenges faced by the copper and copper scrap markets. The panelists who addressed the session forecasts the copper and copper scrap market to remain subdued in the short term. The panelists included Patricia Mohr, Herb Black and Adam Minter.

Mohr, an analyst with Scotia Bank noted that the weak global economic activity must be blamed for low prices of copper and other base metals. At the same time, strong US dollar too had a deflationary impact on commodity prices. The rapid expansion of mining capacities including copper mines has put a cap on commodity prices. After falling to their lowest level since 2007, copper prices are currently in a path of recovery.

There are encouraging signs from economies around the world, Mohr noted. The North American and several Eurozone economies have given early signals of rebound. However, slower economic growth in China still continues to be the main concern. The country’s economy has slowed down during recent times. The Chinese PMI dropped to sub-50 levels, falling to 49.2 during the month of April this year, giving clear indications of economic contraction.

According to Mohr, copper is likely to average around $2.75 per pound during 2015. By 2017-’18, as the new mining projects get completed, prices may start to rise to nearly $3 per pound.

Adam Minter highlighted that Chinese aging population could pose serious labor concerns to labor-intensive industries such as scrap metal industry. To offset this challenge, companies have no option but to switch over to automation. Some regions in China are predicted to have 80% automated scrap yards by 2020.

Herb Black emphasized the role of investment groups on copper market. He also highlighted the various macro-economic factors that have stirred the markets over past several quarters.