Inventory clearance.

Healthy economic conditions in the U.S. and the growth of China's economy have combined to dwindle the former global oversupply of copper.

Frank Wittlake, a consulting metal buyer with Cambridge Lee Industries, Reading, Pa., told attendees of the ISRI Gulf Coast Convention in New Orleans in mid-June that the phenomenal growth in China has been the biggest factor.

"While consumption of rod and bar has been relatively flat in the EU and U.S., Asian consumption is up 12.5 percent in the last couple of years," Wittlake noted.

The increase of Chinese copper consumption and domestic production has led to red metal scrap buying that "has had a dramatic effect on copper markets," he said.

Wittlake sees that market dynamic continuing into the next couple of financial quarters. His survey of scrap dealers has them predicting $1.23 per pound for copper at the end of 2003, while brokerage firms see $1.32 as the average price, and a "few large international firms are even predicting year-end pricing as high as $1.45," Wittlake said.

Copper scrap is tight. "China pulling back has brought all prices down, but cathode is still in worldwide demand, and stocks are dropping; I can tell you brass mills in the U.S. are consuming scrap--80 percent of their melt consists of scrap--way up over their traditional mix," he said.

Global fundamentals will work in favor of high pricing. Environmental restrictions in the U.S. mean little production or mining capacity will come online here. Also, copper yield in ore has diminished to less than 1 percent in the ore being mined in Chile, Wittlake noted.

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

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