War jitters - Nonferrous - Brief Article

Recycling Today, Nov, 2002

Like many metallic commodities, copper has spent recent months in oversupply, keeping its price down. But the fundamentals are improving, according to presenters at the Institute of Scrap Recycling Industries Inc. (ISRI) Commodity Roundtables, which took place earlier this fall in Chicago.

One factor that might help copper's price is an end to the standoff between the U.S. and Iraq, according to industry analyst David Hightower of the Hightower Report, Chicago.

"The speculative crowd is taking a short position that may be reaching a zenith," said Hightower. "When bullets fly, that's when you see major tops and bottoms in the market. At that point, the worst will be behind us," he says.

Investor sentiment regarding the prospect of war may be the biggest drag on the market, as other fundamentals are lining up for a price recovery, said Hightower.

"Since the beginning of August we started cleaning up our fundamentals and it's been much tougher to take the price lower," he remarked.

On the demand side, Hightower called Chinese demand "our backstop," and noted that a key Chinese policy maker recently declared his country's critical need for copper and the government's determination to have "all the copper it needs."

Buying

Average U.S. Refiners Buying Prices for No. 2 Copper Scrap

(cents per pounds)

September      55.00
October        52.29
November       53.68
December       54.50

January 2002   55.40
February       57.34
March          59.64
April          58.80
May            60.39
June           63.95
July           60.59
August         55.48
September      55.68

Source: American Metal Market

Note: Table made from bar graph.