Forecasting trends for lead and copper markets

Addressing the future of copper was S. Murray of Consolidated Gold Fields, who posed the question of whether or not the base metal was about to relive the “golden 60s” or the “leaden 80s.”

Copper averaged $1.18(US) per lb in London in 1988, and 81 cents the year before that, has been having a banner year, averaging about $1.37 during the first six months of 1989.

Murray touches on a number of factors affecting copper’s consumption growth, not the least of which is the increased efficiency of the products featuring the metal. “Better design, including the reduction of excessive safety factors, lighter materials and improved alloys all led to lower use of copper per unit of useful function,” he said.

The metal has also had to battle substitution; technological breakthroughs such as optic fibres, microwaves and satellites for telecommunications; saturation in many consumer goods markets, at least in the developed world; and the ebbs and flows of the global economy.

Murray points out copper end- uses are not uniform from nation to nation, presenting possible market growth and development opportunities for the industry.

Copper scrap should not be a worry to the mining industry, although there will likely be periods when competition with primary supply heats up, he says.

“Copper products are becoming increasingly sophisticated and with this goes an increased cost of recycling,” Murray says. “The modest growth in the secondary refined ratio in the past 15 years of low consumption growth (when the theory suggests the impact of old scrap from the earlier fast growth periods would have been dramatic) implies copper is a long way from emulating lead supply in its high dependence on scrap.”

Murray doesn’t really answer his question about future copper prices but does point out that demand for the metal seems to be closely related to the price of the refined product. Higher prices for copper but relatively stable prices for potential substitutes could bring about major market changes.

“For instance, the gains in the construction sector achieved on the basis of a decade of low prices and the combined efforts of the copper industry’s promotional bodies could be lost to such substitutes as plastic plumbing systems and synthetic roofing materials,” he says.

Lead, it is pointed out by D. N. Wilson and D. B. Evans, may not have the glamor of other major metals, but in terms of consumption, it is the fourth-largest non-ferrous metal. Wilson is with the Lead Development Association and Evans with the International Lead and Zinc Study Group. Both organizations are based in London. Last year, lead averaged 30 cents (US) per l b in London, up from its 1987 price of 27 cents . During the first half of 1989, the base metal averaged close to 29 cents .

Like other metals, lead has had to fight to retain its market share. Low prices during much of the 1980s and increased environmental regulation at the smelting and refining end have taken their toll, discouraging companies from seeking out new lead deposits. New mines increasingly have become zinc or silver plays where lead is extracted as a byproduct.

Six countries — Australia, Canada, Peru, Mexico, South Africa and the United States — currently account for about 70% of the non- communist world’s lead output.

“With a generally static level of supply of primary lead concentrates, the widening gap between mine output and refined metal production has been met by the recycling of scrap materials, principally spent lead-acid automobile and industrial batteries but also sheet, strip and pipe from demolished or refurbished buildings and lead sheathing stripped from old power cables,” say Wilson and Evans.

Production of refined lead and lead alloys from secondary materials accounts for about half of total metal production, with the battery sector being the favorite recipient. Lead is said to have the highest recycling rate of any of the main non-ferrous metals.

A major increase in smelting and refining capacity during the next decade is not foreseen. Announced projects are mainly expansions or the replacement of older facilities by more modern equipment. New capacity may come on stream in the developing nations, but these plants are not expected to be of any great size.

Batteries account for about 60% of total lead consumption. Other uses include in pigments and compounds, rolled and extruded products (for example, sheet and pipe), cable sheathing and alloys.

Potential new markets for growth include load levelling batteries, involving the use of large banks of batteries by electrical utilities or major power consumers to reduce peak power needs, and nuclear waste disposal, where lead, for example, could act as a shielding barrier or corrosion barrier and/or inert filler.

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