The Idaho recorder., 1922-12-01
COPPER A BUY is
OPINION OF BABSON

dency to act independent of the rest
of the market. Roger w. Babson ac-
counts for this change by calling at
tention to a shift in the conditions
which control the copper industry.
"The copper Stocks" says Babson,
"like any others are governed by a
combination Of the conditions in the
security market and the factors that
control. the production and consump-
tion of copper.
"The industry" continues Mr.. Bah
son, ii now in a better position than,
it has been for the past four years.
In other words, it has taken the in
dustry practically this length of time
to recover from the abnormal produc-
ing conditions and heavy stocks built
up during the war years. Due to the
continuance of heavy stocks which,
at the high point in 1919, amounted
to over one billion pounds, production
has been radically curtailed. Prices
have slumped from the wartime
price of 38c for electrolytic copper to
a low point of 12c reached about a
year ago. The industry has suffered
in the present period of readjustment
to greater extent than probably any
other important industry.
"The fact that copper in its manu-
factured forms has excellent wearing
qualities has worked to the disadvan-
tage Of the industry during the past
two or three years. For example, in
the case of ammunition abroad, all of
the shell was destroyed except the
copper cartridge. This, as you re-
member, was used again and again
and at the end of hostilities, large
stocks of unused brass and copper
cartridges went for industrial pur-
poses. Reclaimed supplies are now
greatly diminished so that the demand
for new copper will gradually in
crease from now on.
production has been gradually
increasing since the first of the year.
Production during the war years aver
aged well over $50 million pounds
monthly. Compare this with an out
put during 1921 averaging under rs
million pounds monthly. In fact,
even exports last year were material
w heavier than the total United
States production. Production at the
present time is averaging under 25
million pounds monthly. Exports
have tended to increase and are
| around 65 million pounds each month.
Domestic consumption is alse increas-
| ing so that the statistical position OF
the industry is relatively strong. This
| does not promise any radical come
/ back but rather that the worst is over
and that the long pull outlook is much
L L~4 hoo-z fN-. =, ,1nY
of years. This change will bring
I about better profits for the larger
low-cost copper companies.
/ ''The producing capacity Of the in
dustry is still large so that any in
crease in price tends to stimulate pro-
duction. This, in turn, causes the
market to weaken. The reason fol
/ the slump in most copper stocks
/ around the first of November was
clear enough. The rate of importa-
! ton from South America for a mat
ter of months has been increasing
Our southern neighbor can produce at
| low cost, much lower than domestic
companies, fact that has been hold
ing the domestic price down. Then
producing capacity, however, is dis
! llHlIlCu ctliNt liiC NSiie'iAN 80
creases they will no longer set the
market. The price of electrolytit
copper has been fiuctuating around
lac for a number of months. The de-
mand during 1923 should tend tc
strengthen the market, although pro-
duction will be sufficiently large tc
supply this demand. In the event OF
a good building year in 1928, the de
mand for copper viii improve. i
should total at least as much as this
year, and considerably better than II
1921. The European demand VIII bg
slightly better. Although there art
still variuos 5earlsh factors in tht
situation, the bullish features are Of
i dominant Importance. Hence, ! an
distinctly optimistic for q gradual re-
covery in profits.
"I am distinctly bullish, conclude'
+ Mr.. Babson, ION the stocks OF tn,
large low-cost producing companies.