The right price: global demand that has been draining supply has moved copper's price to the high end of its trading range.

Even during the technology boom of the 1990s, some wondered whether fiber-optics and wireless technology would keep a permanent lid on copper demand and pricing.

After the tech bubble burst, additional doubts set in about whether sales of technical gear could ever match the levels set during the tech frenzy of the late 1990s.

Some of these doubts could still have legitimacy, but thus far the demand for red metals has proven to be far more persistent than the skeptics believed. Asia's emerging economies are demanding copper and brass rod, tubing and fixtures as well as good old copper wire in huge quantities, and a hopeful sign of returning economic health in North America and Europe is only increasing the demand for red metals.

UP, UP AND AWAY. Traders of red metals are all too aware of copper's 2003 rising pricing pattern.

Copper trading at more than $1.00 per pound seems hard to remember for some metals dealers, but Comex copper pricing flirted with that level in recent weeks.

On the demand side, China's robust manufacturing sector is cited as a leading cause of the new red metals resurgence. "While demand for copper dropped slightly for many other industrialized nations in 2002 mad early 2003, Chinese demand has increased rapidly during the same period," note analysts James Cordier and Michael Gross of Liberty Trading Group and Optionetics.com, Belmont, Calif.

While China's hunger for copper and brass fixtures, pipe, tubing, wire and cable grew impressively in 2001 and 2002, "demand in the first half of 2003 surged 26 percent year-over-year from 2002]' the Optionetics authors note. In a six-year span, "Chinese domestic copper consumption has doubled, [with] most of this increase coming with the last two years," the analysis states.

Cordler and Gross also note that higher pricing has nut driven Chinese manufacturers away from acquiring primary copper and copper-bearing scrap on the world market.

The current 96- to 98-cent trading range for Comex copper may already be outpacing a forecast given by Malcolm Southwood of J.B. Were Ltd., Melbourne, Australia, at the Institute of Scrap Recycling Industries Inc. (ISRI) Copper/Brass Roundtable in September of 2003.

Southwood predicted copper would remain on a relatively even pricing keel in 2004 with an 83-cents-per-pound average, followed by a climb to 92 cents in 2005 and to $1.02 per pound in 2006.

Although Southwood correctly identify the trend, the price curve has spiked more quickly for a number of reasons.

Southwood noted that the rise in red metals has been led by constrained supply, steady and slowly growing demand in North America, Europe and Japan and continued strong demand for copper from China.

With demand potentially escalating further, is supply likely to keep up?

STRIKES AND LANDSLIDES. Scrap dealers are lamenting their inability to fully cash in on the copper pricing boom because of lack of supply.

For scrap dealers and processors, the pricing news may be good, but the massive shifting of copper to China does not bode entirely well for U.S. dealers. Southwood says most of the copper China is Consuming goes in to construction, electrical and domestic transportation applications, meaning North American scrap recyclers are not likely to see any of the red metal heading back to their facilities.

Fortunately, the building market remains strong in most regions, meaning that a certain amount of contractor scrap continues to come across scales.

Globally, copper in all forms--including newly-made primary copper--could face a shortage situation, too.

A variety of circumstances have constricted mining and smelting capacity worldwide. Hard-hit North American producers such as Phelps-Dodge and Asarco decreased mining and smelting when copper pricing was in the doldrums earlier this decade.

An October landslide at a major copper mine in Indonesia caused another disruption.

In Chile, labor-management relations have soured. A union leader at the Codelco mine was quoted in an AP news item as saying an agreement was extremely unlikely," meaning a strike at the 218,000-tons-per-year mine was likely. The mine's output represents about 13 percent of Codelco's annual production.

Those involved in a Canadian labor-management standoff at the Highland Valley copper mine in British Colombia say a strike is far less likely, though negotiators have turned to a mediator. That mine produced 180,000 tons of copper last year, Reuters reports.

Between unpredictable production halts and the many copper producers that are struggling to find the capital to re-start shuttered mines and smelters, the supply of raw copper may remain restricted in the near term, despite the high pricing.

DOING THE MATH. In the near-term, as long as China stays hungry for copper, U.S. dealers should have a ready market and improved prices far copper scrap.

Southwood says even with a conservative 9 percent or 10 percent Chinese copper annual consumption increase, "we create demand tension. If that's what happens, the global maker looks to soon be demand-led."

Andy Cheung, FM Metals (USA) Inc., Pasadena, Calif., an ISRI Roundtables speaker who purchases copper scrap for a facility in China, concurs that China will remain hungry for copper.

His statistics indicate that Chinese smelters can procure 71.7 percent of the copper they need from Chinese sources, with cathode production outpacing concentrate production in the foreseeable future.

Cordier and Gross of Optionetics say: "If Chinese demand alone can buoy copper prices in years where demand in most other consuming nations is down, how will prices react as the global economy recovers and demand once again begins to grow in other areas of the globe?"

Even cautious forecasters do not see Comex copper heading back below the 80-cents-per-pound range soon. Considering number two scrap copper spent most of 2002 in a 52-to 60-cents trading range, the news for dealers who can get copper-bearing scrap is good.

The author is editor of Recycling Today and can be contacted via e-mail at [e-mail].