Thefts in US increase as global usage and prices plummet. News stories on the theft of copper piping, wiring, and other materials have abounded in recent years, and more recently as well. Just last month, Verizon Communications announced a $10,000 reward for information about the theft of 16,000 feet of copper communications cables during several incidents around Southern California in recent months. These kinds of thefts, Verizon officials were quoted as saying, put telephone and online services enjoyed by consumers at risk. Across the continent in New York City, thefts of copper cabling were said to compromise the service of the local subway system. And in New Jersey, dozens of localized thefts of copper have been reported in recent weeks.
The stolen copper presumably makes its way onto a black market, much of it destined for export to China. At one time China, the world’s factory and accounting for 40% of global copper consumption, had a voracious appetite for copper scrap which it would then melt down and use in any number of manufactured products to be consumed domestically and internationally. The only problem is, China’s demand for copper scrap has tanked in recent years. Copper is ubiquitous in electrical, electronic, and industrial components and products. Copper is the best nonprecious metal conductor of electricity and is used in power cables, as well as in commercial and residential building wiring. Copper is a key component in generators, motors, transformers, and renewable energy production systems. Global demand for copper cable grew between three and four percent in 2014, according to numbers supplied by the International Copper Study Group (ICGS). Copper in wire, cable and leads accounted for 16 million tons of copper used in 2014 worldwide. World cable production sales amounted to $175 billion in 2014, of which China accounted for $64 billion, about 37% of the world’s total. Sales in the U.S. amounted to $22 billion, Japan, $15 billion, and India, $7 billion. Other major consumers of copper cable include South Korea, Saudi Arabia, Mexico, Germany, France, Indonesia, and Russia. Buyers of the cable are mainly utilities, construction concerns, industrial companies, and telecommunications companies. Copper is also key in information and communications technologies. Digital subscriber lines allow for high-speed data transmission through the existing copper infrastructure of ordinary telephone wire. Copper and copper alloy products are also used in wide and local area networks, mobile phones, and personal computers. Permanent Structural Change Semiconductor manufacturers have launched a copper chip in microprocessors that are able to operate at higher speeds while using less energy. Copper is highly recyclable because it does not degrade or lose its chemical or physical properties in the recycling process. The ICGS estimated that, in 2012, over 30 percent of copper consumption came from recycled copper. However, that situation is changing, thanks primarily to China’s demand patterns. It has come to the point where Carlos Risopatron, head of environment and economics at the ICSG, has described the transformation as a “permanent structural change.” Many of China’s copper rod mills have been sourcing exclusively from copper refined from ore, he said, causing copper scrap imports and prices to plummet. It wasn’t always that way. Just two years ago demand for copper scrap was on the rise, as were prices, accounting, no doubt, too, for the increase in the number of thefts. “In 2010 and 2011, refined copper from scrap grew faster than refined copper from mining,” said Risopatron. The supply-and-demand picture for copper scrap has changed dramatically since, but that news has apparently not yet reached the thieves, who are still out trying to make a killing purloining the metal. How did the “permanent structural change” in China’s demand for scrap come about? One factor was the development of a new generation of wire rod mills that do not use scrap as an input. “This has contributed to a 500,000-ton drop in global direct melt scrap use over the past seven years,” said Risopatron. Direct melt scrap refers to secondary material that can be used directly in a furnace without cleanup. Another factor in the decline of scrap and the growth of copper refined from ore has been the oversupply in mining. “A copper mine oversupply of two million tons of copper in 2012 and 2013 meant that more copper was refined in 2014,” said Risopatron. “We expect copper mine supply growth of 3.5 million tons in 2015 versus 2011.” As a result, world copper scrap exports were down 25%, or 1.45 million tons between 2012 and 2014. “Global trade of recycled copper came down with refined copper prices,” said Risopatron. “One million tons of copper scrap were not exported from 2012 to 2014. Reported imports of copper scrap were down 15% in two years.” U.S. copper scrap exports were down by nearly 10% in 2014 while scrap imports were slightly up. “That meant that the United States had net scrap exports below one million tons in 2014,” said Risopatron. Refined is Up, Scrap is Down The European Union’s scrap imports in 2014 remained stable, according to Risopatron, below two million tons in gross weight. “But the EU is exporting less high-grade scrap,” he added, “while low-grade scrap exports began growing in 2014. The EU is now a net importer of high-grade scrap and a net exporter of lower grades.” China is reporting lower levels of copper scrap imports and is paying less for copper scrap. But copper concentrate and refined imports are at historic high volumes, according to Risopatron. Copper concentrate refers to a product that contains one-third each of copper, iron, and sulfur and requires further processing to obtain copper metal. “Availability of copper increased in China in 2014, on more imports of copper concentrate and refined copper,” said Risopatron. “Much more refined copper are being used by new plants in China.” The bottom line, for Risopatron: “Less direct scrap use combined with new operational capacity meant that refined copper use was up between 2011 to 2014.” If only the thieves in the U.S. would get the message.