For years we have talked about the “unicorn” in the scrap industry that we saw all the way back in 2010 and 2011, which was copper trading at $4.00/lb. It had seemed to be a number that we may have never see again. And if we did, it would be so far out into the future.
Copper Hit $4.00
Well, it looks like the future is finally upon us as we have seen copper prices trading over $4.00/lb for the first time on Friday, February 19, 2021. There are multiple factors and reasons why the prices have increased the way that they have and we’d like to go over and highlight a few of them right now.
Copper Demand Is There
After 2020 you have to know that anything is possible even things that you could not possibly imagine. Here we are having a copper price that has almost doubled since bottom now in March 2020 and seems to be increasing week over week. One of the big reasons is the demand that was pent up from the pandemic’s large push down on world economies. We have now seen a massive demand across the world and especially out of China for everyone’s favorite red metal.
Why is there a demand?
The primary reason for this demand is increased optimism that the economy that was already moving at strong levels is going to pick up. A lot of the stimulus dollars, as well as government programming from multiple countries around the world, are going to kick into effect as trillions of dollars were created and being pushed into the world economies. This money will be used for more copper production and manufacturing as well as further copper or demand coming out of mining operations throughout the world.
This demand looks to continue throughout 2021 with many economists predicting that we could see copper rising as high as $4.50 and some even through the “extreme unicorn” number out there of $5.00/lb copper by the end of 2021. With all of these new dollars being pushed into the economy we expect to see this demand continuing into 2021.
Shipping Rates Increasing
With shipping across the world in a real crunch due to the pandemic, new work from home rules, and people wanting further convenience we have seen shipping rates increased dramatically. Since the beginning of 2020 compared to the beginning of 2021, we saw shipping rates increase by a multiple of 5-10x the amount over that period of time.
What does that mean? Well as things become more expensive to move and it becomes slower to move materials we have seen copper prices also increasing along with other commodities such as iron ore, aluminum, platinum, and multiple commodities like oil and gas.
With these crunches put into place throughout the world shipping economies, we have seen a very large demand for more ships but one of the primary reasons for the price increase was because of covid protocols it’s taking much longer to unload many of these cargo containers throughout the world.
Stock Traders Affecting Prices
As we have documented multiple times over the years, the copper and other commodities trading prices have drastically been affected by traders on Wall Street and throughout the world. As 2021 opens up two more trading options through apps and people doing it on their own while working from home we have seen an increase in trading demand for all things commodity-related. Not only copper and iron ore but also things like wheat, grain, and soybeans have had an increased trading platform over the last few years especially going into 2021.
Now What?
We Suggest To Sell
We’ve always had people asking our opinions on the markets and when they should buy and when they should sell and we rarely give advice on these things as our philosophy has always been to move material as quickly as possible to mitigate losses. But with these new prices out there it would be a good idea to continue the trend of moving material as quickly as you accrue it because when prices are so high you’re always. Going to want to move material quickly so you continue to make money and move it at these high prices.
