About the blog: What Things Are Made Of

AMERICA'S GLOBAL DEPENDENCY FOR NEARLY EVERYTHING


The United States relies on imports for dozens of commodities in everyday use. Often enough, that reliance is 100%. In this book I aim to provide awareness of the hidden geology and mineralogy behind common things, and to develop an appreciation for the global resource distribution that underpins our society. While concerns about oil import reliance are in the news every day, our needs for other minerals are comparable and are typically unknown even to technologically aware Americans.





Tuesday, April 13, 2010

Prices

Prices of mineral commodities, like those of most things, vary over time according to supply and demand and natural and geopolitcal events that artificially inflate or deflate prices. Tariffs and government regulations can impact prices too, as can market speculators.

Copper’s price has been driven in recent decades mostly by the rate of building construction in the biggest consumers – the US for all of the 20th Century, and China since 2002. Half the copper used in the US goes to building construction. During the 1990s, copper’s average price for the year ranged from a high of $1.38/lb in 1995 to a low of 76¢ a pound in 1999. It remained below $1.00 per pound until 2004; in 2006, the price nearly doubled to an average of $3.15/lb and has remained above $3.00/lb on average every year since then (except 2009, at $2.37). Copper was near or above $4.00/lb briefly in 2006 and again in 2008. A general upward trend in 2010, to more than $3.50 now, may signify an improving economy – or at least a perception of one in the markets.

Neodymium, critical in many applications but in rather low quantities, was around $6/kilogram (2.2 kg/lb) in 2003 but as demand increased (for magnets in electric motors for cars and windmills, among other things), the price reached $60/kg in 2007 and has been in the $40-$46 range since then.

Indium, an important component of thin films in liquid crystal displays and flat-panel TVs and computer screens, ranged in average annual price from $120 to $375 per kilogram from 1991 to 2001, and reached a low in 2002 at $60/kilo. As technology improved and we began to buy more and more flat-panel products, indium’s price climbed dramatically in the 2000s — $176/kg in 2003, $643 (2004), $961 (2005), $815 (2006), $637 (2007), $519 (2008) and $390 in 2009 as economic problems reduced its consumption. In April 2010, indium was at about $625/kg. Indium is three times more abundant in the earth’s crust than silver, but it forms few minerals and almost never in economic concentrations. The 600 tons per year produced on earth come mostly as byproducts of zinc mining; half the world production comes from China.

Even a common commodity like rock salt shows price fluctuations. From 1991 to 2003, its price hovered between $19/ton and $23/ton. Since 2004 the price has climbed steadily, to $35/ton in 2009. In the same time frame, US imports of salt nearly doubled, from 11% in 1991 to 20% in 2008-09. The biggest consumer of salt is the highway deicing business (43% of consumption), with the chemical industry in second place (35%).

When you compare prices, be aware that different materials may be priced differently. It could be pure metal, or a metal oxide, or a metal concentrate that’s priced, but all under the heading of cobalt (or whatever).

Image from Wikivisual under the terms of the GNU Free Documentation License.

2 comments:

EcoRover said...

Interesing info, Dick. A neighbor that works at MR told me US copper consumption is small compared with China, and the Chinese market pretty much makes or breaks profitability of D Washington's MR mine.

I was reading your consulting web page--given your professional work + historical interests, you might be interested in Pynchon's novels Mason & Dixon (the surveyors, with some interesting observations on magnetic fluctuations etc) or Against the Day (western mining camps, Iceland Spar etc).

Richard Gibson said...

Yes, China's copper consumption continues to surge, at near a quarter of the world now (US is at 12% or so). I'm pretty sure that the price of copper (and hence the economics of the mine in Butte) is absolutely driven by Chinese consumption.

Thanks for the references! I do enjoy such reading - one comparable to the Mason-Dixon story that I enjoyed is The Measure of All Things by Ken Alder, about the French Revolution era attempts to measure the earth and define the meter.