A few years ago, it was easy to read a newspaper report about someone going into a house and trying to steal copper wire. Sometimes the people were hurt and that is why it made the newspaper, the issue was the price of copper or the price of the commodity.

In an article by Andy Home of Reuters, the price of copper went from a 4 year low of $4.371 a tonne to over $6,500 a tonne. The reason for the price increase is the classic supply and demand curve. China has been buying on a large scale as the economy increases; given the low price – the larger miners had cut global production, also COVID played a role, and the recyclable market is in disruption.

Copper scrap accounts for 35% of the global market according to analysts at Roskill. China is the world’s largest scrap buyer, but they wanted cleaner scrap. In 2018 Chinese scrap imports fell 32%, in 2019 the number fell again by 38%.

The big scrap generators such as the US and EC are sending their material to Malaysia for processing and upgrading before going to China. Lower scrap generation owing to price weakness and reduced manufacturing activity has been compounded by locked-down collection and recycling networks and disruption to international shipping logistics.

Linking to dividend paying stocks, there are always more than one market for every product and the COVID-19 has highlighted for example in the food business there are shipments to the grocery store for individual families and the restaurant and larger venue segment. When the shutdown happened and the restaurant and larger venue size was not good, the shipments to the grocery store could not be changed overnight. In the commodity business when the price rises, not only production increases, the recycling market becomes larger. Price matters, but profit is more important.

There are more questions than answers, till the next time – to raising questions.