Originally, the company produced only foundry castings at the 106 East 20th Street plant, but expanded to producing machined parts in the 1920’s. A Machine Shop building was leased until 1969 when a new Machine Shop building was built at 401 West 23rd Street.
A modest fall in global production of copper ought to be matched by a rising price but that’s not the case as a metal widely seen as a bellwether for the broader economy because of its multiple industrial uses sits close to a two year low.
The problem is that a 1.4% decline in output from the world’s copper mines in the first half of the year was offset by a 1% fall in the use of copper.
The net result is that copper, which had been expected to enjoy a period of strongly rising prices, has slipped to trade around $2.59 a pound, a few cents up on the $2.53/lb reached earlier this month and well down on the $3.25/lb of in the middle of last year.
Six months of data reported earlier this week by the International Copper Study Group, an industry research organization based in the Portuguese capital of Lisbon, is not enough to say that copper is signalling a global recession.
But if the downward trend continues the rate of copper consumption might soon be quoted as an example of how quickly the world’s economy is slowing, largely as a result of the China v U.S. trade.
According to the ICSG two major copper mining countries, Chile and Indonesia, produced less copper in the first half of the year. Chile reported a 2.5% decline largely caused by mining lower-grade ore. Indonesian production of copper concentrate was down 55% as two big mines made operational changes.
Other regions, notably North America and Australia increased production slightly.
But the key to copper as an economic yardstick is in its rate of consumption by industries as diverse as construction and electronics to transport with a surge in copper demand expected from the electric vehicle (EV) industry.
Copper Signalling A Slowdown
The fact that copper use is declining rather than rising is a pointer to a slowdown in global industrial production which could precede deeper economic problems with copper acting as an early-warning indicator, hence its nickname of Dr Copper.
The ICSG said Chinese copper use rose by 3% in the latest half year, but the amount of refined copper imported by that country fell by 16%. Outside China, the rest of the world used 3% less copper.
Another measure of the copper market which ought to be pointer to a higher price for the metal is an ICSG estimate that there was a deficit of copper supply in the June half-year of 220,000 tons, a relatively modest amount in the global copper market of more than 20 million tons a year.
Investment banks have mixed views about the outlook for copper. Morgan Stanley in a research report released earlier this week sees copper rising next year to $2.93/lb before reclaiming the $3/lb level in 2021.
Macquarie Bank is more cautious. It sees a price next year of $2.54/lb, roughly where it is today, before moving up to $2.71/lb in 2021.
But the big issue for the forecasters is judging whether demand can outstrip supply of newly-mined copper and stockpiles which hit a five-year low in March but have been rising ever since.
This week’s ICSG report said the total amount of of copper in stockpiles held by the world’s three major metal trading markets (London, Shanghai and Comex in the U.S.) rose by 48% in the June half-year to 519,745 tons.
A 60% fall in the U.S. stockpile was more than offset by London rising by 154% and Shanghai rising by 21%.
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