Page 69 from: May 2011

69May 2011

Given the high prices currently commanded by copper,
there will be almost certainly an intensification of
efforts both to substitute the red metal with other
materials and to design copper out of certain products,
delegates to the ISRI Spotlight on Copper were warned.

In recent years, the one thing that copper scrap professionals have
been able to predict is that someone
at the annual Spotlight on Copper will
claim that ‘we couldn’t have predicted
these prices last year’.
As in 2009 when the markets were in
the worst of the doldrums and in 2010
when they exceeded all expectations,
that prediction held true again this
year with copper sitting comfortably
above a frothy US$ 4 per lb. And
despite some cautionary notes, the
consensus was that the markets would
remain strong for the foreseeable
future. Nevertheless, high prices and
new alloys are looming to cause new
technical challenges to copper. And
although they are not impacting on
the markets as yet, they will weigh on
processors in the future.

First shortfall since 2007
The bullish session was opened by Joe
Pickard, Director of Commodities at
ISRI, who identified key features of the
market. Of these, the first and perhaps
most important was the simple fact
that global demand for copper out-
paced supply by 300 000 tonnes in
2010 – the first shortfall since the
heady, pre-recession days of 2007.
This occurred despite global refined
copper production increasing by 4%
in 2010 to 19 million tonnes, of which
copper scrap-based production

accounted for 3.3 million tonnes. The
reason? Global copper consumption
grew 7% to over 19.3 million tonnes.
According to Mr Pickard, most ana-
lysts predict another shortfall in 2011,
with the International Copper Study
Group pegging the number at 435 000
tonnes.

Drivers and risks
The key driver, as Mr Pickard sees it, is
Asia – and China in particular. The lat-
ter achieved a refined production of
nearly 4.6 million tonnes in 2010 – ‘or
more than two-and-a-half times pro-
duction in the USA’.
Among other important factors, Mr
Pickard highlighted an excess of liquid-
ity sloshing around the commodity
markets as a result of low interest
rates and easy money policies, con-
straints on new supply coming on-line,
urbanisation and economic develop-
ment, and economic recovery. In addi-
tion, Mr Pickard pointed specifically to
a recovery in US manufacturing as yet
another positive factor influencing the
red metal.
The speaker also saw risks, including
‘the potential impact of Chinese
efforts to cool inflation by raising
interest rates’, rising energy prices,
austerity measures, geopolitical ten-
sions, stock liquidation (especially in
China), and substitution. The last point
received particular attention: even

before the current high prices, substi-
tution accounted for ‘several hundred
thousand tonnes annually’, according
to Mr Pickard.

Unexpected effects
Gerd Hoffman, head of recycling mar-
ket activities at Aurubis, pointed out
that current high prices are having a
number of unexpected effects on the
copper scrap industry. ‘In Europe,
some smaller merchant companies are
shying away from dealing with copper
scrap because they don’t want to
tie up that much liquidity and they
don’t see a prospective reward,’ he
explained. As a result, copper scrap is
finding its way very quickly to the con-
sumers.
Long term, Mr Hoffman believes elevat-
ed copper prices will result in an accel-
erated shift in applications and substi-
tutions. An even longer-term result, he
suggested, was that substitution will
change the types of scrap generated for
the market.
And he also argued that
high prices will lead to
miniaturisation efforts
as companies try to
‘design copper out of
products’. This phenom-
enon will ultimately
make scrap recovery
more difficult as it will
fall to scrap processors

to screen and filter copper from steel,
plastics and other materials.

One word: ‘bismuth’
Salvator Davi of PTP Consulting took the
audience by surprise with a presentation
predicated upon one word: ‘bismuth’.
Of it, he said: ‘Be afraid, be very afraid.’
In the very near future, he claimed,
recyclers of copper-based metals and,
to a lesser extent, solders will be faced
with the question of how to recycle
these metals when they are alloyed
with bismuth. It is, he noted, the ‘new
lead’. It is a difficult, expensive metal,
Mr Salvatore suggested, but it is also
here to stay, and ‘each and every one
of us in this room must responsibly
deal with bismuth’. That won’t be easy
because, as Mr Salvatore noted, bis-
muth-bearing alloys ‘cannot enter the
present red metal recycling stream as
it currently functions’. The re-melting
industry, he suggested, will have to
adapt.

S p o t l i g h t o n c o p p e r By Adam Minter

Gerd Hoffman, head of recycling
market activities at Aurubis.

Joe Pickard, Director of Commo-
dities at ISRI.

High prices bring
red metal risks

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