Speculators blamed for high copper prices

10 May 2006
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11 May 2006 | Anusha Bradley

Soaring copper prices, fuelled by investment funds, are putting pressure on fabricators' cash flows and even threatening their survival, according to the International Wrought Copper Council (IWCC).

Copper prices on the London Metal Exchange (LME) have more than tripled since 2003 and doubled in the past year. Last week a tonne cost $7,220 compared with under $2,000 three years ago.

Simon Payton, secretary-general for the IWCC, said supply and demand had always been "reasonably balanced" but increased demand from China and South America had tipped the balance and investment funds, cashing in on demand, pushed prices up further. The group has written to the LME and the Financial Services Authority asking them to limit speculative activity.

Manufacturers were already facing high energy prices and longer payment terms, he added.

Thierry Centner, IWCC chairman, said: "This market, where speculators buy what does not exist, is doing serious damage to our industry and will bring into question whether the LME copper price should continue to be the recognised reference price for our industry."

As SM went to press, media reports said LME traders predicted copper prices to fall by 20 per cent in the next few months. Payton said: "The higher prices go up the further they have to fall, but there is no way of knowing when that will happen."

SMmay2006

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