SPOKANE (Scrap Monster): The participants at the recently concluded ISRI Meeting have expressed cautious optimism on a possible copper scrap market recovery. According to the speakers at the ISRI Commodities Roundtable held in Hilton, Chicago, 19-21 Sep, 2016, there are very less chances of copper scrap market reverting to buoyant days recorded during earlier part of this decade. However, the market has started showing signs of stabilizing at the current low prices, they noted.
The ISRI Copper Roundtable was moderated by Greenland America Inc.’s Randy Goodman. The speakers included Chris Lewon of Utah Metal Works, Joe Bernhardt of Aurubis and Ed Meir, an analyst with Intl FC Stone.
Chris Lewon, who spoke on the session, noted that copper scrap recyclers across the globe are faced with a multitude of serious issues including sharp drop in demand and acute shortage of supply. The scrap prices have plummeted over recent time, he stated. In the immediate near term, he foresees no major change to market conditions. The scrap flows are likely to remain more or less unchanged, Lewon noted. Copper scrap markets will be seen bumping along the bottom area, he added.
Lewon noted that strong US dollar has made copper more expensive for copper exporters in the US, in comparison with exporters in other countries. The market is still in the hangover of the boom witnessed earlier during the decade, during which demand had hit the peak and prices had surged to new highs. However, the hangover period has seen equally sharp drop in prices. The cut in prices, coupled with significant decline in scrap flows during the past two years has taken the industry to a tough situation. Strict actions including capacity reductions and cost-cutting measures are necessary for the survival of the industry, Lewon said.
Joe Bernhardt shared a more optimistic view on copper scrap markets. He expressed the view that the markets are likely to register growth despite being exposed to many challenges. The rising demand for copper from automobile industry will drive the market growth in future. The average use of copper in automobiles has more than doubled from 20 pounds a few years back to as high as 50 pounds per vehicle currently. The latest technological advancements have enhanced the levels of copper generated by shredding process.
Meantime, Ed Meir stated that the near-term and long-term future of the copper scrap market is closely tied to Chinese market conditions. While admitting that the country’s economy has been going through tough times through the past several years, Meir stated that the credit and liquidity measures undertaken by Chinese administration to strengthen their economy have started to yield results. There are numerous indications that the Chinese economy is on the path of stabilization. The improvement in auto sales and retail sales provide ample proof for slow but steady economic recovery happening in the country. The real estate market in the country too has started to pick up, Meir noted.
Meir pointed out that copper imports by China during the initial six months have registered modest improvement in 2016. It must be noted that copper imports had registered significant decline during the corresponding period in 2015. However, copper prices have not yet made a rebound, mainly because supply streams have continued to remain strong along with rise in demand for the metal. Going forward, copper supply surplus will continue to restrict huge rise in copper prices, Meir noted.