As the metals market takes an ever worsening turn, this question pops up more and more. Should people start hoarding their metals and wait for an upswing. This question has been debated and dissected yet there seems to be no general consensus. But we deal with scrap so let’s talk about it. Specifically copper scrap and what can happen when hoarding occurs.
Here at CRS we never recommend hoarding. This following example is one of our reasons why, we had a customer with right around 5000 pounds of copper wanting a very specific price. They wanted exactly $2.30 a pound. We offered the best we could do at $2.25. They would not sell for less than $2.30. Well in just a few short months, copper is not even worth $2.30 a pound at the mill (which of course means shipped out of Alaska). Some data even points at copper not maintaining its floor above the $2.00 market price. Which of course means in Alaska it is worth far less. In this instance, the holding on the copper and not selling has caused this customer to lose well over $5000 in value.
A different point of view on this would be that the customer should and will just wait until copper does return to higher levels. Yet this mentality is hard to agree with. Simply put no one knows when that will occur. Some analysts say 5 years or more. This being said, the one thing everyone can agree on is that markets love trends. They like to stay in them. In the metal market there are steel, aluminum, copper, lead, precious metals, etc trending and all these movements are on a one way path downward.
Hoarding materials can pay off or it can really hurt. It’s important for everyone to really think about the benefits and negatives. In today’s market, hoarding really doesn’t make fiscal sense unless one is willing to wait an extended period of time (3-5 years). Taking all of this into account, it is always a personal choice to either sell or hold. Just be informed at what the future holds when making that decision.