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Copper future bright as manufacturing re-emerges

The growing role for copper in the modern global economy is bolstering the non-ferrous metal and offering greater opportunities for recyclers despite the pandemic, experts have said.

An online forum on the red metal organised by the Institute of Scrap Recycling Industries was told that copper prices had been weak in early 2020 and market uncertainty and new Chinese import restrictions had impacted on the scrap sector. Prices began to rebound at the start of the third quarter, however, as key global economies showed signs of an early recovery, particularly in manufacturing.

‘Exciting times’

Recyclers were advised by Jason Schenker, a futurologist and president of Prestige Economics, that China’s recovery and positive findings from recent Purchasing Managers Indices would have ‘a huge impact on copper’. Indeed, he added, the Caixin PMI in China was at its highest level since 2012. Janet Sander, vice-president of Encore Wire, added: ‘It is an exciting time to be a copper buyer. I am very bullish.’

Schenker said China had recovered quickly because manufacturing accounted for 20 to 25% of the country’s GDP. Those economies more reliant on service sectors, such as the US and the EU (at around half that level), would need longer. ‘It will take two years for US growth to get back to the start of Quarter One 2020 because service industries will be slower to bounce back than manufacturing.’

Buying more stuff

He argued that the generally quoted unemployment rate in the US of 8.4% was actually nearer 17% or 18% and that would also slow growth. Against that, he said the world population was growing and with those in emerging economies becoming more affluent, ‘they’ll be buying more stuff’.

As demand for raw materials and resources and grows, ‘the role of recycling in the supply chain will become infinitely more important,’ he added.

India and China

Dhawal Shah managing director of Metco Marketing in India, said it had been a ‘chaotic year’ for his country but he was convinced ‘India will re-emerge very quickly and come out even stronger. Demand is growing for refined copper’.

As an example he quoted the need to complete the electrification of India’s 70 000 km of railways, which he said this would require 200 000 tonnes of copper. There was also a growing need for renewable energy with India setting a national target of 50% by 2030. ‘India will be fertile terrain for copper and refined copper.’ He added the country’s growth would be ‘sustainable, rational and realistic’.

Quality first

Shah spoke about suggestions that, with China was closing its doors to low-quality scrap, more imports would go to alternative countries such as India. While he said that was possible, ‘No country likes to have substandard products and there is an unspoken acceptance that both buyers and sellers respect that’. He said buyers did not want to hurt the environment and selling countries did not want to send ‘bad quality waste’ for others to process.

The panel considered the challenge of meeting low contamination levels to export to China and the importance of a strong relationship between suppliers and customers. ISRI chief economist Joe Pickard said ‘recyclers tell us that they are experiencing every challenge under the sun’.

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