COMMENTARY — Rising copper consumption

Western world refined copper consumption rose 2% to 10.2 million tons in 1993, the eighth consecutive year of record consumption. In the past three years, we have come through a major Western World recession in which copper consumption set new records in each of those years.

In 1994, Western refined consumption is expected to grow by 4.5% to another record level of 10.7 million tons, and this will likely increase by 3.6% in 1995 to 11 million tons.

A 7.7% growth rate is projected in the U.S. in 1994, slowing somewhat in 1995. European refined copper consumption should grow by 3.5% this year and 4% in 1995. Refined copper consumption in Japan is expected to be flat this year and grow by 3% in 1995, with growth expected to continue in both years in the rest of Asia. Even with imports, a Western supply deficit of 308,000 tons is projected for 1994, with a deficit of 305,000 tons expected for 1995. Additions to lead supply from imports from the former socialist block, combined with sales by the U.S. Defense Logistic Agency, shifted the Western market balance between 1990 and 1993 to a surplus from a supply deficit. However, growing lead consumption, reduced imports and slightly lower Western production should result in a supply deficit of 102,000 tons in 1994 and 162,000 tons in 1995.

Zinc imports from the Commonwealth of Independent States, China and North Korea, as well as continued releases from the Defense Logistic Agency stockpiles, should result in a continued supply surplus of zinc in 1994 of about 270,000 tons. However, projected increased consumption, lower production and a decline in imports would shift the market to a slight deficit in 1995. The buildup of zinc stocks in recent months should level and decline later in 1994.

As a result of the speculative runup in silver prices in the late 1970s, silver consumption declined sharply and production increased dramatically, reversing a supply deficit pattern from the mid-1960s. During the 1980s, more than 838 million oz. of silver were produced than were consumed . . . If silver consumption continues to grow at 6.3% per annum, and if there is no growth in supply, the remaining 416 million oz. of excess production will be consumed in the next 18 months.

— From remarks by Asarco’s director for base metal sales, Robert Bothwell Jr., at a recent analysts’ meeting in New York City.