A copper conundrum.

The copper market continues to surge past expected levels. After a brief period of sharp decline in copper scrap prices earlier this year, prices have again soared to record levels during the first half of April.

Now, with a fairly bullish short-term outlook some vendors are suggesting it is possible that prices could top the $4 per pound level. However, even as many people have a bullish outlook toward copper markets, concerns persist that prices in the latter half of 2007 could decline sharply.

One scrap dealer in the Midwest says that he senses a slowdown in the amount of material coming through his door. This, despite prices that have climbed by around 50 percent during the past two months. The scrap dealer estimates that volumes are down by as much as 30 percent.

Other copper dealers are less bearish on the market, though they look at many of the fundamentals and see some concerns. A sluggish U.S. housing market, as well as soft domestic auto sales have made the copper market much more difficult for domestic manufacturers, who both generate and consume scrap metal. However, one scrap recycler termed the economy outside the United States "sizzling." Markets outside of North America, notably China, India and some of the developing countries in Asia, continue to drive the copper market.

While China has been a boon to the copper scrap market, measures are being proposed in that country that may affect the dynamics of the copper market. According to recent reports, a top official from the China Nonferrous Metals Industry Association says China is likely to impose stricter controls on copper and copper product exports in the next few months to curtail the current trade surplus and to reorganize the copper industry to serve its domestic market.

Pockets of strength exist within the U.S. copper manufacturing market, however. While housing is soft, segments targeting the mining industry are in better shape.

Concerns about a strike at one copper plant is keeping a floor on prices, but could eventually result in prices moving up further. In fact, even with some news that points to slowing demand, prices for copper have jumped up sharply.

Another factor that might indicate some slowing within the U.S. has been the somewhat tepid domestic buying, though several sources say wire manufacturers are operating at good levels.

Nickel and stainless steel markets continue their advances, driven partly by concerns that nickel inventories are low, keeping many consumers buying the material out of fear that supplies will run out.

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(Additional news about nonferrous scrap, including breaking news and consuming industry reports, is available online at www.RecyclingToday.com.)