Copper buying plans have been soft because the U.S. manufacturing recovery has been lackluster. Buying will weaken further in the third quarter, according to PURCHASING Magazine's latest Business Survey. "Buying has been very slow for the past 18 months," says the senior copper buyer of an instrumentation maker in Georgia, "and we don't expect much of an increase for several more months." The materials manager for a telecommunications company in Ohio agrees that "there's no need to increase the existing level of copper purchasing either for wiring or components." These comments explain why analysts have scrapped earlier U.S. copper use forecasts of 10% growth in 2002. In fact, market data shows that end use may fall another 7% in 2002 after falling 14% in 2001 to 2.9 million tons. London Metals Exchange (LME) spot price for cathode averaged 70¢/lb in January and 77¢ in June for a six-month average of 72¢/lb. Latest polls of market analysts and producers still suggest that LME copper will average 74-75¢ in 2002. However, producers have cut 700,000 metric tons of world supply. J.P. Morgan's commodities research team maintains that "this copper production discipline is entirely price driven." Once copper market fundamentals improve, the J.P. Morgan and other metals economists predict the LME average prices will range from 82-88¢ in 2003.

stundza@reedbusiness.com