Copper & Code

A wave of buying broke over the copper market fortnight ago. In three consecutive trading days 41,000 tons were sold, equivalent to the output of all U.S. mines for two months at current production. Reason: domestic producers had notified the sales clearing agent of the Copper Code Authority that they were about to raise the price of copper from 8 1/2-c- to 9-c- per Ib. Last week as the new price went into effect, sales slumped off considerably. Not in three years had coppermen been able to get 9-c-. When President Roosevelt took office they could get barely 5-c-; the January before copper touched an all-time low of 4.7-c-. The 1933 average was 7.15-c-. At that price Kennecott Copper, whose operating costs are one of the lowest of any big domestic unit, was able to show a $2,307,000 profit for the year against a $7,102,000 deficit for 1932. Fortnight ago it declared a 15-c- common dividend, its first since January 1932. Phelps-Dodge announced a 25-c- extra dividend in February and May. American Smelting & Refining Co. began paying arrears on its 7% preferred last December. This wavelet of prosperity was not specifically started by the copper code which President Roosevelt signed last April, but the code has effectively consolidated the industry's gains. Its chief provisions were: 1) a sales agency to act as a clearing house for domestic sales; 2) monthly sales quotas of 20,500 tons of virgin copper, 9,500 tons of scrap. The Secretary of the Code Authority, Ralph R. Eckert, was appointed Sales Clearing Agent, whose prime function is to keep sales within the quota. Producers must file with him a copy of all sales and the price per pound. Price changes must be filed 24 hours in advance, thus preventing one company from stealing a march on its competitors. The code specifically forbids destructive price cutting, gives the Code Authority power to fix prices in an emergency or suspend code provisions if they go too high. Actually, with a 4-c--per-lb. tariff, the ceiling of copper prices is self-limited at about 12-c- per Ib. by the threat of foreign competition. Chairman of the Code Authority is an oldtime copperman, President E. Tappan Stannard of Kennecott, who works side by side with a onetime tool manufacturer, Harry O. King, NRA Divisional Administrator. When the copper market developed into a three-price affair--Blue Eagle, non-Blue Eagle, and regular export copper--President Stannard had to slap a ban on non-Blue Eagle copper which he extended for the second time last week. When scrap producers failed to agree on quotas which the code left to them to divide, Administrator King foisted scrap quotas of his own devising on the industry. Currently their toughest problem is to find buyers enough to absorb the monthly quotas. Administrator King got the leading fabricators to agree last month to fill most of their requirements out of freshly mined copper. The industry liked his tactics so well that last week it was reported that he would resign from NRA to accept an executive position with the Copper Code Authority. When General Johnson sent the copper code to the President he remarked that if all the copper mines in the U.S. shut down, the country would get along for 18 months on the supply already above ground. Two weeks later April consumption figures showed that world stocks of copper, as of May 1, would last at that month's rate of consumption less than half a year. But they still stood at the whopping total of 567.500 tons, of which 467,500 represented unsold copper in North and South America.

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