Copper climbs again.

After several months of steadily eroding prices, the copper market has perked up lately. The surprising resilience has taken some market observers by surprise, as many earlier said they felt that prices for primary and secondary copper would decline or hold firm at the $2.50 level. However, more recent spot checks have shown that copper prices have jumped to above $3 per pound because of strong buying by Asian sources.

In the March issue of Recycling Today magazine, a number of copper industry observers said they had expected to see a flat market or possibly some downward pressure in light of concerns about some hedge funds unwinding their positions.

The prevailing word at that time was that as one investment house began to unload its position, other funds would follow suit in a herd mentality.

However, after slumping to a one-year low in February of 2007, prices had rebounded sharply as of mid-March. Prices for copper were up around 25 percent by the middle of March, after declining sharply by mid-winter.

Reflecting the strength in the market, imports of copper into China for the first two months of the year reached around 470,000 metric tons, a 56 percent increase from figures for the same time last year.

While the surge in demand has caught a number of copper dealers by surprise, several industry observers also say that inventory levels have declined, adding to the overall bullish short-term outlook. The limited supply of material in warehouses is helping to push prices higher, with surprising strength from a host of markets keeping the days of supply on hand limited.

China, again, is the major driver of the copper market and is still buying aggressively, despite the somewhat muted supply.

According to recent commodity reports, copper stocks in warehouses that the London Metal Exchange (LME) monitors have declined to less than one week of supply on hand.

While copper markets have strengthened, toward the end of March, signs indicated that a recent shortage in China might improve as several large orders of copper are expected to reach ports in the country.

Creating some uncertainty about the direction of a number of secondary commodity markets, including copper, was the Chinese New Year. During the two-week holiday season leading up to Feb. 18, orders and business come to a halt. However, after the holiday celebrations conclude, many shippers get a better feel for what markets will look like during the next several months.

Copper is not the only metal that has seen some resurgence. According to some sources, primary aluminum imports to China are being substituted with scrap imports. Part of the reason for the decline in primary and alloy exports can be explained by the recently imposed 15 percent export tax, put in place by the Chinese government this past November.

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While there have been some positive signs for the aluminum market, some financial analysts predict a softening in prices and in demand. Prudential Securities downgraded Alcoa's stock in light of expectations that China will sharply increase its own aluminum production, which may help to increase the supply of aluminum on the open market.

Aluminum prices on the London Metals Exchange have shown a sharp increase during the past year. However, prices have appeared to top off during March.

Recent figures show that Chinese domestic aluminum production is growing at a rate in excess of previously reported figures. The International Aluminum Institute notes that Chinese aluminum smelter output for January 2007 increased by 39 percent compared to its earlier forecasted growth of 35 percent. For February, production growth topped 40 percent. And, while Chinese demand also is growing, its production rate is growing at a pace greater than its internal demand.

Nickel and stainless steel, which have seen significant price increases throughout the past several years, also could find themselves out of the reach of a number of companies. Several reports have noted that with nickel and stainless steel prices reaching record levels, more consumers may consider substituting less expensive substitutes. These changes would likely not be reversed, meaning that any retrofit of an operation would be permanent.

However, with nickel recently cresting above record highs and up significantly from only a few years ago, many commodity traders say they are expecting a sharp correction. Toward the end of March, there were several days of moderately sharp declines in nickel prices, although markets still are keeping prices up.

Meanwhile, China, the largest producer of stainless steel, is expected to boost its production of nickel to 7.35 million metric tons this year, a jump of 37 percent from last year.

According to an analyst with Heinz H. Pariser Alloy Metals & Steel Market Research, total global stainless steel production is expected to climb to 31 million metric tons. Such an increase in stainless steel also would increase demand for nickel, which is used to produce stainless steel.

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