While most wire and cable industry veterans and commodity analysts expected 2006 to be a year of moderation for copper prices, when copper jumped 9.45 cents to nearly $2.36 a pound on March 17 on the New York Mercantile Exchange, it set another record.
Some industry analysts attributed the increase to a report by Phelps Dodge, one of the world's leading copper producers, that it expected strong copper prices and consumption out of China to jump. One analyst said copper performance over the last three or four years is “nothing short of miraculous” and that a surge in demand and a dearth of copper production capacity would send prices even higher this year.
Jeffry Bleiman, principal of Wm. B. Bleiman & Sons Inc., a Philadelphia-based independent manufacturers' rep, said the March 17 increase of nearly 10 cents per pound was totally unexpected.
“Although there is still much speculation around copper, it continues to increase,” he said. I would hope it doesn't curtail the numerous jobs that we feel will happen in the next few months. One thing is certain. Now is the time for our distributors to make some money. In an increasing market, their inventories will appreciate. If they play their cards right, they should have higher profits.”
One manufacturer executive told his reps to expect higher prices for building wire:
“While we were bullish on our copper predictions for the month, we would have never expected the jump we saw on Friday (March 17),” he said. “Copper's increase has led to a large disparity between current market pricing and the expected market pricing. There are two major factors to consider at this time. With demand being relatively low, copper trading would typically drop during this time of year as supplies began to increase. Obviously, this is not the case. Also, China has ramped up its consumption once again and still harbors roughly 96 percent of the world's copper supply in the Far East. These two factors are making the copper trading prices even more bullish for the year.
“Don't be surprised to see copper reach the $2.50-per-pound mark within the next couple of months. We will see some fall-offs due to profit taking and the minimal demand that is currently present in our market. However, this will not affect the overall status of an extremely short supply of world copper and we expect to see more of what we have seen over the last few days.”