Business: Copper Prices

In the kingdom of copper there are two major provinces. One is the U. S., bounded by a towering tariff wall (4¢ per lb.). The other is the world outside. There copper men have low production costs and, since Depression, usually sell their metal below the U. S. price, thus keeping most of U. S. copper inside its own stockade. Last week, for the first time since 1931, foreign copper prices spurted past the U. S. quotation, rose to 9.95¢ per lb., compared to the current domestic price of 9.75¢. As the price climbed, the foreign copper cartel announced that next month they would increase production from 75¢ to 80% of capacity. Purpose: to give a war-scared European market all it wants, keep U. S. copper men from cashing in on the higher price abroad.

Like steel, copper booms only when general business booms. Its price is determined by what the traffic will bear. For some time the differential between U. S. and foreign prices has been decreasing. Since June 1935, the U. S. price has risen 1 ¼¢ on the strength of gradually increasing demand from home industry. That demand is currently giving U. S. copper men their best year since 1930. Since the first of 1935, foreign copper has risen nearly 3¢ primarily on the strength of Europe’s rearmament programs.

Although they have never succeeded in stabilizing copper prices over long periods copper men periodically play with “stabilization,”‘ sporadically get into and out of international agreements to keep up prices by restricting production.

In 1929, during a period of “stabilization,” copper men squeezed their price up to stratospheric levels of nearly 24¢ per lb. It was a cordial invitation to open every high-cost mine in the world. By 1933, the U. S. price was down to less than 5¢ per lb., foreign quotations to 4.40¢.

Millstone that long ground down copper prices was excess metal that backed up on producers when Depression plugged sales. In 1933, copper above ground in the U. S. bulked some 540,000 tons, which at the low rate of Depression consumption was enough to last the U. S. about two and a half years. Since then, U. S. copper men have cut excess stocks to some 218,000 tons, about three months’ supply at the present rate of consumption.

Even better off is foreign copper, among whose chief producers are the Congo, Rhodesia and Chile. Purchases by Europe are currently holding foreign demand nearly to the rate of 1935, when the Continent consumed 1,215,000 tons, an all-time record. Chief U. S. copper companies to cash in on the foreign market are Anaconda and Kennecott, which operate big mines abroad.

For weeks, U. S. copper men have been arguing whether they should boost their price from 9.75¢ to 10¢ per lb. Fortnight ago, the idea got a stiff setback when potent Kennecott announced it had plenty to sell at the present price, promptly increased its output 25% rather than take a chance on having a runaway market at a higher price. Last week, U. S. copper men were still wary enough to make no price advance even in the face of the foreign rise, although in the past such an action would have been almost automatic.