THE locked doors of a public library in West Norwood, a drab part of south London, are an unlikely economic indicator. But a plaintive note explaining the closure—thieves have stripped the roof of its copper cladding, letting in rain on the books below—hints at profound changes to the global economy. And copper is the metal most intimately affected.
Police in London note a close correlation between thefts like the one in West Norwood and global commodities markets. Around the world, copper crimes have soared along with its price. Filched cables have reportedly caused train delays and stalled repairs to telecoms networks. Heating boilers, pipes and air-conditioners have been ransacked. Criminals are clearly sensitive to the gyrations of the global economy. Copper is reckoned to go one better: it earned its moniker of “Dr Copper” for its supposed ability as an economic forecaster. The metal’s price movements are widely believed to prefigure shifts in the world economy.
The theory looks compelling. Copper’s excellent conduction of electricity and heat means that it is used not only to cable and pipe the globe. An average car contains over 25kg of copper; electronic gadgets, from PCs to mobile phones, use copper for wiring and contacts. Its ubiquity means that rising demand should provide an early indication of an uptick in manufacturing and construction. Copper sagged in the early stages of the credit crisis, for example, and then started to pick up at the end of 2008, some months before the stockmarket began to rebound. Such prescience is now cause for concern. As fears of a double-dip recession mount copper has slumped to a ten-month low.
Copper is less sensitive to the ups and downs of rich-world economies than it was, however. For that, blame China. In 2003, before the full weight of China’s tearaway economy became apparent, copper traded at below $2,000 a tonne. It hit $10,000 a tonne earlier this year, before falling back to $8,400 a tonne now (see chart). Such is the scale of China’s urbanisation and industrialisation, both of which require plentiful supplies of the metal, that it consumes at least 40% (and by some reckonings 50%) of global output of around 16m tonnes in 2010. Global demand for copper is expected to rise by more than 40% to 27m tonnes by 2020.
Copper is not alone in feeling the effect of China on demand. But the metal is something of a touchstone on the supply side, too. Nearly a decade into China’s rampant commodity-buying spree the bosses of the big mining companies are starting to talk about the growing problems getting all manner of minerals out of the ground. Copper best illustrates the issues they face.
There are few sizeable new deposits in copper’s heartlands in North and South America and Australia. Annual production at Escondida in Chile, the world’s biggest copper mine, peaked at around 1.5m tonnes in 2007. The only new mine that comes close is Rio Tinto’s Oyu Tolgoi in Mongolia, which will start commercial production in 2013 and may eventually produce half that amount.
New copper supply is going to be increasingly dependent on smaller mines that are deeper underground and have lower ore grades. As Gayle Berry of Barclays Capital notes, these mines will also mainly be in riskier parts of the world, such as Africa’s copper belt, stretching across Zambia and Congo. The Chinese have a mine in Afghanistan. The lack of vital infrastructure such as roads, railways, power and water, and the ever-lengthening process of getting mining permits, will make the newer mines far more costly.
This bodes ill for future supply. Lead times for new projects, once four to five years, have crept up to between seven and eight years. Wringing extra copper out of existing mines has its difficulties too. Miners dig in the better parts of mines first. As older mines get deeper, ore grades decline and extraction becomes more expensive. The disruption rate (the amount of promised copper that fails to materialise), about 2% five years ago, is now as high as 8%, according to Andrew Keen of HSBC. These difficulties and the buoyant price of iron ore and coal, which can be mined far more easily, have led the world’s biggest diversified miners to favour those commodities when allocating investment.
Copper prices are also likely to stay high because of the lack of good substitutes. West Norwood library’s roof repairs are dragging on because of arguments over a suitable replacement for the copper, for instance. Michael Widmer of Bank of America Merrill Lynch reckons that the current price is probably high enough to spur serious efforts to find alternatives. But most of the easy substitution has already been done. The world’s plumbers have switched to plastic piping where they can. Chinese boffins have engineered air-conditioning units with (bulkier) aluminium heat exchangers.
铜价可能维持高位，因为缺乏较好的替代品。例如西诺伍德图书馆屋顶的维修被拖延，也是因为对于合适的铜替代品有争论。美国银行-美林（Bank of America Merrill Lynch ）的Michael Widmer认为现在价格可能已经高道可以激发人们努力认真地去发现替代品的程度了。但是绝大多数的简单替换已经被做过了。世界上的水管工已经在可行的地方都换成使用塑料管道了。中国的科学工作者设计了（更加硕大）的铝制热交换空调设备。
Aluminium can also be used for electric cables but much more has to be used for the same effect. It is no use for increasingly miniature electronic devices. And the connections are nowhere near as good as copper. A drive to wire 2m American homes with aluminium in the 1970s led to several burning down because of sparking from poor connections—building codes now ban aluminium from most domestic wiring. Many utilities are simply not interested in changing their cabling: it would require all their engineers to retrain.
In the short term copper prices may drift lower as growth slows in America and Europe. But high prices have encouraged destocking in China and those stocks will eventually need replenishing. Over the long term the fundamentals have most analysts convinced that high prices are here to stay. Dr Copper may no longer be as good at taking the temperature of Western economies. But it speaks volumes about the effect of China on the world.
译注：
The Copper Belt or Copperbelt (usually spelled as one word) is the copper mining area of Central Africa which runs in Zambia (Copperbelt Province) and Democratic Republic of Congo (Katanga Province). This area gave name to the Copperbelt Province, around the towns of Ndola, Kitwe, Chingola, Luanshya and Mufulira. In some contexts it excludes the Katangan Copperbelt of the Democratic Republic of Congo, around Lubumbashi. —— http://en.wikipedia.org/wiki/Copperbelt
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