Copper: balancing Brexit bureaucracy with high demand
Considering a shiny red metal in a post pandemic world.
Global commodity markets function according to their own internal logic. So do the bureaucrats and civil servants tasked with unravelling the implications of Brexit. Throw in projected increases in demand for copper and copper alloys, and the future looks interesting. With clients in the EU and with most of our copper sourced from outside the UK, we’re positioned right at the heart of a copper-coloured matrix. This is not without its challenges, but it also gives us unique opportunities to see what’s going on.
Buying and selling the future
Copper prices are determined by the commodities markets in a complex interaction of actual and predicted supply and actual and predicted demand. Despite the reputation of commodity markets to fluctuate wildly on whim and rumour, the reality is that trends tend to be very rational over the medium and long terms.
In 2020 the markets struggled with competing pressures of reduced production, pandemic uncertainty and the understanding that future demand would continue to be high. In early 2021 copper prices on the London Metals Exchange (LME) fluctuated considerably, from $7712 per metric tonne on 2nd February, to $9617 on 25th. Prices have been more stable since: $9022 on 5th March and $9098 on 22nd of the month.
Occasional extremes don’t disguise longer terms patterns.
Several factors indicate the price of copper continuing at around these levels which are at an eight year high. Demand in Asia, which is leading the post Covid-19 recovery, continues to be high. Likewise, the requirements of sustainable development and ‘green’ energy call on copper for electricity generation, transmission infrastructure, energy storage, and consumption.
The world has plenty of copper still to extract but over time there will be more reliance on recycled copper (already a thriving industry) and ores from deeper mines and potentially of lower grade. Prices are unlikely to fall but, given the relative predictability of these factors, nor should we see the sort of irrational increases that inhibit economic growth.
Whatever you or I felt about the Brexit referendum of 2016, the reality is that we now operate in a different environment when compared to life within the EU. From our end, we kept (and keep!) a careful eye on the new regulations and requirements and in particular the paperwork that’s needed for trade into and out of Europe.
It would be foolish, of course, to pretend that there have been no hiccups; there is definitely a tendency for new rules to be interpreted differently in different places across the continent. We’re definitely still learning. So, there are some issues around part loads to Europe and delivery times for these have become longer in some cases. We’re working hard to make this as painless as possible for our clients. On the up side, it does look as if there will be greater uniformity and predictability at border crossings as everyone gets used to new systems.
The same applies, albeit to a lesser extent, to orders coming in from Europe. Overall we can see that, provided we keep focused on the details of import and export, business will remain buoyant, with smoother delivery in both directions.
The future looks bright
Having paid attention to costs – both long and short term – we’re well placed to continue supplying our clients with high grade products at realistic prices. Copper is never going to be cheap, but one of the cornerstones of our business is good value, so we always work hard to pass on any price advantage that we can secure.
Our business in January and February has been brisk, and March also looks healthy. And if we are supplying copper, it means that many other businesses are using it too. So, after a challenging 2020, we feel fortunate, very cautiously, to be sensing the start of economic recovery. We feel privileged to be in a position to work with so many good customers and doubly so to believe that we might all be within reach of something like normal business activity. The future is bright. The future is copper-coloured.
Advanced Alloys Ltd is a specialist supplier of products made from the highest quality alloys of copper, brass, bronze and zinc. They have an exhaustive range of products suitable for all industries. Alloys can be delivered in wire, tube, sheet or bar form, and cut, bent or manipulated as required. An experienced logistics team makes sure that products reach their destination in perfect condition as swiftly as possible.
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