If your business produces scrap copper, you might have noticed that 2021 and 2022 were good years for copper prices. If your business buys scrap copper, you have probably noticed that it’s more expensive than it has ever been. Copper prices around the world hit an all-time high in 2021 and reached a record high in early March of 2022, with prices going over $5 per pound. In May 2021, the price for one metric ton of copper hit $10,512, which is a 130% increase from March 2020. But, the upward price trend isn’t expected to continue forever.
Reasons for the Rising Price of Scrap Copper
Slower copper production in recent years has led to shortages, which has resulted in an increase in demand. It has caused prices to go up by 125% since March 2020. In fact, it’s one of the commodities that has gone up in price since the start of the pandemic. Several factors have led to this increase, which include the following:
- Slow Growth in Copper Supplies — The mining output for copper has grown a lot more slowly in the last three decades compared to other metals. This exceptionally slow growth is because of a number of factors. Copper prices fell 58% from the beginning of 2010 and in the beginning of 2016 to a point where it was close to the cost of production. This discouraged any new investments in mines and ore processing facilities.
- Energy Costs and Copper — Mining and refining metals is an energy-intensive business, and copper prices tend to move with the price of crude oil. In the past, people would often assume that the relationship was mostly on the input side. Higher or lower crude oil and natural gas prices would make copper mining more or less expensive, but the rising price of oil and natural gas could be increasing the demand for scrap copper because of the demand for alternative technologies (such as wind, solar, batteries, and electric vehicles).
- The Energy Transition — The cost of solar energy dropped by almost 70% in the last decade, and the cost of batteries fell by the same amount. Since 1990, the cost of solar energy and battery storage has fallen by almost 98%. If these trends continue over the next few decades, it will be possible to create an abundant amount of clean energy (which will require a lot more copper wiring).
- China’s Influence — China buys approximately 40-50% of all newly mined copper every single year. Some of it is used domestically, but a lot of it is re-exported inside the parts of intermediate or finished goods. The growth of China’s manufacturing sector has often affected the price of copper three to five quarters in advance.
- Shift in Consumer Demand — From December 2019 to December 2021, American consumers spent 18% more on manufactured goods but only 6% more on services. They weren’t alone. Consumers from around the world spent more on manufactured goods, which included consumer electronics and other products that contain large amounts of copper content. But, most of the world is going back to a new version of normal life (which is bringing consumer spending back to experiences than on manufactured goods).
If you’re looking for a Corpus Christi recycling center that you can use to recycle your scrap copper, be sure to get in touch with Dawson Recycling and Disposal.