Metals market is red hot
KAI RYSSDAL: Today's Wednesday, May 10th, a day for things to go up, it seems. The Fed raised interest rates, as I mentioned, for the 16th-straight meeting. What really caught our attention was the metals market. Zinc, platinum and aluminum all hit news highs. But get a load of copper. The lowly stuff of pennies and household wiring now goes for more than $8,000 a ton. That's better than twice the price this time last year. Here's our Amy Scott.
AMY SCOTT: The price of copper has climbed so high that it now costs more than a penny to MAKE a penny. A buck-twenty-three to be precise, says the US Mint. Some analysts say today's price spike results from a tight supply. A major Mexican mine announced it would close due to an ongoing strike. Mines in Chile and Indonesia have run into other problems. But metals analyst Edward Meir at Man Financial says demand for copper actually fell last year . . . which should have kept prices in check.
EDWARD MEIR: You cannot justify a doubling in price just this year alone based on the fundamentals, you know. It makes no sense to me. Which tells me, that there must be something else behind it.
That something is hedge funds, pension funds and other speculators. They're pouring money into commodities of almost any kind. That's pushing costs up for manufacturers. They use copper to build everything from plumbing fixtures to car parts. Eventually consumers will have to pay more for that stuff. But economist Cliff Waldman with the trade group Manufacturers Alliance says so far industry is absorbing the costs.
CLIFF WALDMAN: The further it goes, the more it's going to have an impact. But at the moment, given the relatively strong output of the manufacturing sector and strong productivity, I don't think even this kind of a surge is going to knock manufacturing off of its course entirely.
As copper cruised past all previous records today, some analysts gave up predicting the next peak. In theory, the higher price should attract more production . . . which would bring prices back to earth.
In New York, I'm Amy Scott for Marketplace.