Johannesburg - The value of copper stolen in May declined to R12.9 million from R13.6 million the month before, according to the South African Chamber of Commere and Industry’s (SACCI’s) copper theft barometer.
SACCI acting CEO Peggy Drodskie says: “The May figure is 2.38 percent lower than a month ago and 6.1 percent lower than a year ago.”
However, the volume of copper stolen increased to 180 metric tons in May 2015, from 179 metric tons in April 2015.
Drodskie explained the international average monthly spot price of copper decreased to $5.849 in May from $6.432 April 2015, and the latest information showed South African exports of waste copper products increased significantly to $7.2 million in March, from $3.4 million in January.
“The level of exports seems to bucking a downward trend,” Drodskie said. “According to the Multi-Commodity Exchange (MCX), the momentum on multiple time frames is bearish with a descending tendency in the short- and medium-terms, although minor bounce backs can be expected.”
Recently published research by Zhang Xiao, a fixed income analyst with BNP Paribas, and Christopher Balding, Associate Professor at the HSBC Business School at Peking University’s Graduate School in Shenzen, found strong evidence that Chinese copper stocks were being used primarily to facilitate a carry trade under capital controls.
Because of higher interest rates in China than in the rest of the world, Chinese investors borrowed money off-shore using a letter of credit from a bank to import copper and other metals, but predominantly copper.
“The metal is put into warehouses and the money is used to invest in higher yielding such as property, financial products or manufacturing facilities. It is estimated that as much as 70 percent of China’s imports of refined copper was used to obtain financing rather than for actual consumption,” Drodskie added.
Drodskie said, assuming the research was accurate, the closer alignment of Chinese interest rates to global rates would reverse the demand for this method of obtaining finance, and the demand for copper would, as a result, diminish.
“With depressed investment and a falling Chinese stock market, there is little likelihood that that the copper price will increase in the near future. There is already evidence that this is occurring as Chinese copper imports have been dropping.”
In the United States, there was evidence of increased acknowledgement of the economic impact that copper theft had.
“In Kentucky, a man and a woman have pleaded guilty to a combined 33 criminal charges involving theft of copper wire from lighting systems on Kentucky highways. And a man recently entered guilty pleas to 28 felony charges resulting from a copper-wire theft investigation by the Office of the Inspector General which coincided with multiple burglary and vehicle break-in investigations.”
The suspects were each indicted on 22 counts of first-degree criminal mischief, and the prosecution was recommending a sentence of 10 years in prison — five years for each of the theft and criminal mischief charges, Drodskie said.
In South Africa, at the Cabinet meeting of 24 June, the introduction of the Criminal Matters Amendment Bill 2015 was approved for tabling in Parliament.
“The amendments provide for changes to the laws pertaining to infrastructure related offences such as cable theft and telephone lines. Stricter provisions are provided for the granting of bail, sentencing of offenders and the creating of a new offence to criminalise damage to essential infrastructure caused by tampering or interfering with the functioning of basic services through criminal activity.”
Drodskie added the Bill would now be subjected to the Parliamentary process and stakeholders would be able to comment on it before it was promulgated.
“The Bill, once passed, will ensure that mechanisms are put in place to safeguard infrastructure, in which much-needed public investment is placed, to ensure that the country meets its economic growth targets and increased employment.”