Copper usage to fall with switch to aluminum

Copper consumption will decline going forward as the price differential between the red metal and aluminum continues to encourage substitution, according to Jim Vann, Rea Magnet Wire Co. President.

Vann attributed the change to copper prices increasing an average of 8.5 percent annually since the 1980s while aluminum prices have remained low.

Vann said he has seen many changes in the industry, including the switch to aluminum, the increase in copper prices and the consolidation of the industry.

The danger of more volatility is that if customers don't know what prices will be from one month to the next, it will be difficult to pirce and sell products in the long term.

Copper, brass lead times out

Service centers are reporting extending lead times for all copper and brass products on the back of strong demand from the automotive and housing sectors, which could encourage some buyers to turn to imports

Lead time for certain light-gauge material are out as long as 18 weeks from 12 weeks previously.

The long lead times could encourage original equipment manufactures (OEMs) and service centers to turn to copper product imports to meet their customer orders.

LIGHT GAUGE COPPER LEAD TIMES REMAIN AT THREE MONTHS

Lead times for light gauge copper products remain at three months.

For light gauge flat rolled, orders are placed for June. That's way out, the first service center source said. A fourth service center source confirmed this trend, adding that he expects lead times for light gauge material to stay out on the back of continued strong demand from automotive, ammunition and electrical distribution end marks.

One of the major mills has moved their lead times out by two weeks, and we expect other domestic mills to do the same, the fourth service center source said, pegging lead times for these products at nine weeks at least.

Most copper mills are hesitant to add staff to meet this increased demand, the source added. Mills are often reluctant to add a bunch of personnel, because then we enter into summer months, when there are shutdowns – auto manufacturers' maintenance always happens in the first two weeks of July. By the time the mills get everyone trained and up and running, they'll have to fire them. So they'll work through it the very best way they can, which is pushing out lead times, the fourth service center said.

GOLDMAN TEMPERS ROSY COPPER CALL

Goldman Sachs Group Inc. has pared back the bullish copper forecast it issued last year, saying the tightness originally expected to develop in the second half of 2011 is unlikely to materialize for another year.

Spot copper on the LME crossed the $10,000 per tonne mark in early February and hit a record high of close to $10,148 on February 14th and has averaged around $9,622 per tonne so far this year.

"Recent events pose downside risks to demand, potentially deferring our critically low inventory scenario. As a result the risk/reward in this position has diminished", Goldman analysts said.

LME copper stocks have grown some 14% since the start of the year, while those on Comex have risen some 30%.

The physical supply situation has been further supplemented by continued political unrest in the Middle East and North Africa.

"We believe the growth conditions for those inventory draws have changed and our critically low inventory scenario may get pushed further out, creating downside risk to our late 2011 forecasts and some downside relative to current near record high forwards" the Goldman analysts added.

COPPER HITS RECORD HIGH, EXCEEDS $9,000/T ON LME

Copper hit a record price on the London Metal Exchange Tuesday after topping $9,000 per tonne for the first time ever in the pre-market session.

A combination of factors, including the Euro strength, short coverings and protracted speculation about exchange traded funds sparked the rally, traders said.

Three month copper closed at $8,986 per tonne in the LME's second ring compared with an opening price of $8,790 per tonne.

The red metal hit a high of $9,044 per tonne, with the low at $8,717 per tonne. Copper stocks in LME listed warehouses fell 1,000 tonnes to 351,375 tonnes.

I think it is technical covering; gold and silver made new highs overnight and the strength of the Euro, said a Category II trader.

Market participants should expect a wave of profit taking and future margins increases, a second Category II trader said in a note. "Buying the dip just entered a whole new uncharted level of risk" he said.

Copper Prices Leap As Mart Eyes Quake Impact

Copper prices surged Monday as traders tried to gauge the extent of disruption to output from Saturday's earthquake in Chile, the world's top copper producer. Three month copper erased last week's losses, rocketing 3.7% higher to end second ring trade on the LME at $7.360 per tonne on Monday vs. Friday's close at $7,096 per tonne. In New York May delivery copper settled at $3.35/lb up 2% from $3.284/lb on Friday, after earlier hitting highs of $3.487/lb.

It was your typical reaction to a catastrophic event. The 8.8 magnitude earthquake, which saw miners across central Chile and neighboring provinces temporarily shut operations and evacuate workers, closed some 1 million tonnes of copper production Saturday. Chile's largest copper mines are located in the northern regions and were unaffected by the quake. But while the quake's impact on Chilean mine output could be limited other market participants warned it might have far reaching consequences for the global copper concentrates market.

One third of global concentrate production would be out of Chile, and while not all of that is going to be disrupted there is potential that smelters in Japan, China and India that have term contracts may be notified that they may receive lower tonnages in the weeks or months to come. Production could also be impacted further due to problems with Chile's power supply. Over the coming days, power may have to be rationed to provide it to the rest of the country. There could also be delayed consequences for more remote copper mines that draw their electricity from diesel operated power plants, which might face fuel shortages because many of the country's oil refineries have been shuttered by the quake

Copper Scrap Prices Decline as Offshore Sales Lose Steam

CDA Set to Register Antimicrobial Copper-Based Alloys With the EPA