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"Two mega developments will impact world copper consumption: the level of global business...

"Two mega developments will impact world copper consumption: the level of global business activity and substitution," writes Simon Hunt, a veteran watcher of the market. With neither factor boding well for the metal, he says, all that's propping prices is copper's financialization. This too will end; "copper prices will fall sharply, and that is almost a given."
Comments (13)
  • nafar
    , contributor
    Comments (223) | Send Message
     
    I agree as far as global business activity is concerned. China is the biggest consumer of copper and has been the biggest importer as well. With gradual increase in copper production in China, her demand for imports would shrink faster when China slows down and would first meets its requirement from domestic output. I also see a downward trend in price. Regarding substitution of copper with any other metal may not be efficient as this metal is the best conductor for electricity and efficiency. Can the gentleman would let all of us know the likely substitution.
    16 Dec 2011, 10:41 AM Reply Like
  • Sean F
    , contributor
    Comments (85) | Send Message
     
    My teenage daughter make statements like this to her Facebook friends, 'I am going somewhere tonight". Just to get attention. Childish really. China is a long way off from having decreased demand for cooper. Have you ever been to China? I have. The electric grid is, at best, rudimentary. Much of the rural population only have 1-2 outlets per home (if you call it a home). Scare me out of SCCO? Not a chance. Yield, total return on equity are the highest in the space. Long SCCO for 5 years and counting.
    16 Dec 2011, 12:07 PM Reply Like
  • lindsay lopez
    , contributor
    Comments (40) | Send Message
     
    Have you ever been to a ghetto in the US? Same thing - need a lot of copper.
    16 Dec 2011, 01:37 PM Reply Like
  • fire0nice228
    , contributor
    Comments (35) | Send Message
     
    I'm a new investor I have shares of CU, do you think I should switch to SCCO?
    19 Dec 2011, 03:28 PM Reply Like
  • 153972
    , contributor
    Comments (807) | Send Message
     
    I agree with Nafar's comment that the author needs to define what is the substitute. I've heard of rumors of coppers replacement but nobody ever says what it is.
    16 Dec 2011, 01:47 PM Reply Like
  • calapuya
    , contributor
    Comments (7) | Send Message
     
    The substitute is aluminum. Aluminum wiring has been used in the past in the United States. Sometime before the 1970's it was used in mobile homes. If you sell an older mobile home today people will often ask if the wiring is part aluminum. It can be a fire hazard. I doubt the Chinese would be too concerned about that.
    16 Dec 2011, 03:25 PM Reply Like
  • 153972
    , contributor
    Comments (807) | Send Message
     
    Calapuya, Yes, now that you mention it aluminum has been mentioned but almost everyone I've read or listened to also states that the conductivity of aluminum to copper is like comparing apples to oranges. In other words, aluminum is not cost competitive with copper when factoring in its conductivity.

     

    I would be interested in reading an article refuting that assertion. Can you provide one?
    16 Dec 2011, 03:35 PM Reply Like
  • calapuya
    , contributor
    Comments (7) | Send Message
     
    Sorry, my knowledge about aluminum wiring comes from the personal experience of selling an older mobile home. However, I have seen aluminum mentioned quite often as a rather poor alternative to copper.
    18 Dec 2011, 01:15 PM Reply Like
  • nafar
    , contributor
    Comments (223) | Send Message
     
    To Sean F comments: I have been to China and have interacted with many suppliers for years. China is consuming 40% of world's output and have increased their copper output quite a lot. Probably now it is No. 2 or No. 3 producer of copper. Its natural that when China goes slow, they would first consume from their increasing domestic output and decreasing imports. Naturally the prices would fall unless other countries perform far well to compensate the likely reduction in imports which is questionable as Europe (probably 3rd largest consumer of copper) is deep debt crisis.
    17 Dec 2011, 04:37 PM Reply Like
  • Sean F
    , contributor
    Comments (85) | Send Message
     
    The Chinese are probably smart and decisive enough to use chinese cooper and commodities minimally. Import the inexpensive materials now. Hold the home based commodities as long as possible. 1. 2 billion+ people, forever to support. Just thinkin.
    20 Dec 2011, 09:22 PM Reply Like
  • nafar
    , contributor
    Comments (223) | Send Message
     
    As prices have decreased so much that any proposal to use alternative metal with reduced efficiency products may not become feasible. Year to date it slipped over 40% and on week on week basis over 5%. This is due to reduced imports by China, I guess.
    19 Dec 2011, 03:38 PM Reply Like
  • Agbug
    , contributor
    Comments (1136) | Send Message
     
    For the reference to alternatives, Wikipedia has some details on that;
    http://bit.ly/tQogrG
    Aluminum is viewed negatively in residential construction in the US due to it's tendency to expand and contract with temperature more than copper. This caused lose connections and fire hazards on older mobile (and some stick built) homes.
    Silver has the best conductivity of all the metals. Copper is second.

     

    I have SCCO on my radar but am waiting for a much lower entry point as I agree with the basic premise that copper has been "financialized" and the global slow down that may be coming is yet to be fully appreciated. Copper will fall hard if China has "issues" and a deflationary environment takes root.
    19 Dec 2011, 07:55 PM Reply Like
  • 153972
    , contributor
    Comments (807) | Send Message
     
    Agbug, Thx for the info.
    20 Dec 2011, 02:52 PM Reply Like
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