I read the average new home uses 500 pounds of copper.
So now that housing has crashed and not a lot of new ones will be built for years and years, copper prices are in total freefall.
What else will crash? Wood? Appliances? Concrete? Realtors?
When a nation who has become addicted to home building stops building homes, the ripple effect will be tremendous.
Man, that whole supply and demand thingy, you just can't beat it...
Copper Falls to 8-Month Low on Housing Slowdown, Supply Gain
Copper fell to an eight-month low in New York, extending a slide that began in May, as a slowdown in U.S. housing and rising inventories fueled concern that demand will lag behind supply.
Prices have fallen 36 percent from a record high on May 11 as new-home construction in the U.S. fell the most in 15 years and global stockpiles of the metal rose to the highest levels in more than a year. Builders are the biggest users of copper in the U.S., the world's second-largest consumer.
``It's going to be a long time before residential housing bounces back,'' said Michael Smith, owner of T&K Futures and Options Inc. in Port Saint Lucie, Florida. ``Housing is such a big consumer. It's going to be tough on old copper, unless something changes.''
January 05, 2007
Don't look now, but copper prices are crashing as housing crashes
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27 comments:
"What else will crash? Wood? Appliances? Concrete? Realtors?"
Keith, wood has pretty much done that already.
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Lumber prices drop to five-year low
Home Channel News
Thursday, October 5, 2006
Lumber prices fell 32 percent this year, to $274 from $401 per thousand board feet, according to the Wall Street Journal.
On a monthly basis, prices are at their lowest levels since mid-2003, the newspaper said.
HCN has reported several companies in recent weeks have announced mill closures, including Tempec, Weyerhaeuser and Louisiana-Pacific.
In addition to mill closures, numerous forestry companies are curtailing production, according to the forestry industry newsletter Random Lengths.
The newsletter said cutbacks in production are planned at White Swan, Wash.-based Yakama Forest Products, which will cut production by 50 percent and at RSG Forest Products, which has lowered output at mills in Oregon and Washington.
Also, Dillard, Ore.-based Upqua Lumber has dropped two shifts due to market conditions; and Grangeville, Idaho-based Bennett Forest Industries will shut down production of boards, dimension lumber and studs starting Oct. 9.
Keith,
I told you months ago about some of the REIC using the line that "new construction prices cannot fall because of material costs," and pointed out articles that supported attacking this same subject.
Remember this?
“(Agent) Douglas Jewell said the market had slowed considerably. The slow-down, Jewell noted, is cutting into profit margins, but he doesn’t see buyers getting huge savings, because the cost of construction materials such as copper, plywood and petroleum-based building materials are up.”
Link to above quote
Yes, building costs are coming down which is spurring development in other sectors, namely commercial and other non-residential areas.
See this rebuttal post from my debate on commercial construction with Mish dealing specifically with building costs.
Make sure to read the other posts in this series and take a look at Mish's posts as well.
Enjoy!
So, all those law breakers melting copper pennies because there is a bull market and the metal is worth more than the face value of the coin, are now in a Bear Market.
Your Decision-Makers at work.
te he
iw
Will the NYSE get the long awaited smackdown in 2007, or will the PPT keep the pumps on? They are rife with subprime lenders and builders.
One year chart for the house of cards.
Funny article in today's Wall Street Journal with the following headline:
Facing Empty Cellars, Homeowners Try Buying Bottles By The Foot
Apparently one of the amenities in all of those new McMansions out there is a wine cellar. Of course the problem is that the people who bought these homes didn't have a wine collection. As a result they've hired wine consultants to help them fill up their wine cellar because nobody wants to look at an empty wine cellar, lol.
Good wine at pennies on the dollar is always nice too. I expect we'll see Seller's offering the cellar as a sales perk very soon...
Hmmmm so home prices are FALLING, copper prices are FALLING , wood price is FALLING.
And yet inflation is running at 10-15% and about to go Weimar Germany style?
I hope all building supply retail prices come back down to reasonable levels. I had a few inside and outside projects that I wanted to get done this mild (so far) winter, but have put off because of the outrageous cost of materials.
I don't think that it’s going to happen soon. HD and Lowes seem to be holding on to the high prices "they deserve", having gotten used to them. Just like stubborn home sellers! After all, home building will rebound back to where it was in the spring, why bother to reduce prices during the normal winter slowdown, right, RIGHT?!
down $20...yikes!! What kind of hyperinflation environment is this? Must be a conspiracy of sorts most likely orchestrated by illegals and jews
not to spoil a good time, but Keith you forgot to mention (as you always do) that copper is still 350% above 2002 levels.
"sane person said...
not to spoil a good time, but Keith you forgot to mention (as you always do) that copper is still 350% above 2002 levels."
Right you are! I was in HD last night, #12-2 copper electric wire was $76.00/250ft roll.
That’s down from the $95.00/roll high price of last summer, but way above the $16.00/roll I paid in 2001 when I put an addition on my house.
That's a minor reduction in wildly increasing prices, just like housing! Hardly a crash!
PT said:"Good wine at pennies on the dollar is always nice too. I expect we'll see Seller's offering the cellar as a sales perk very soon"...
Thats true, possibly list it as bunker, or studio apt for extra income.
I may have been away the day in Econ 101 when they taught this, so forgive me for asking.
How is it possible to have falling commodity prices and hyperinflation at the same time?
Does anyone want to bet against a miraculous recovery in the stock market right at the close on thin trading? Down almost a hundred on the Dow and NYSE. I bet neither close more than fifty down. Any takers?
Only an hour left on trading. Anyone??
Yup - lumber paid off for me nicely for in the short game during the Oct. earnings season (But regional banks/aka mortgage lenders didn't and I hit stop losses on the builders!). So that (wooden) leg is done.
Spot Gold down $20 today to 607! I'm watching it carefully now particularly at the 595, 565 levels before deciding to get in again.
-K
Here in coastal Humboldt Ca. There are HUGE mountains of logs piled up turning black. Lots of milled lumber too.
"27 comments"
even with the "anon" posting being allowed again, this blog is slowly dying off just like the housing bubble myth...Y2K anyone?
do you guys still believe this shit after 2 years of blah blah blah about it? even ufo's went away eventually...find a new paranoia. or take some xanax.
Florida Gator
Chinese to the rescue.
Agree with the posts showing that copper prices are down but still up compared with six years ago..same with most homes. Keith said to buy gold to protect yourself from fiat money, gold is way down from last year. Same with some of the stocks he said to short. How much money has Keith lost in gold and shorting stocks? The any blogger who tries to seek a balance with the marketplace is a troll.
I'm the first to admit that the world economy baffles me, especially Europe. High unemployment, uncompetitive, high taxes, high real estate prices, high cost of living, massive immigration from other eurozone countries, Africa and muslim lands, corruption, slow growth in most countries, and a euro that has risen almost 100% since its low a few years back and this is the place to "be" now?
After taking a year off and traveling around the USA I see the same dying towns that have been dying for years, growing towns with robust economic activity, and people still moving and buying homes in places like Phoenix where 2006 was the 4th best.
so when gold is at $800 foxwood you'll eat crow and admit you're a fool right?
Stillwater Capital Partners just purchased a 30 story condo tower on the water in West Palm Beach Florida for a good price ($36,500,000) and we plan to invest about $300,000,000 in West Palm Beach over the next 3 years.
Not all Florida real estate is alike and we believe there are great
opportunities available to the patient investor.
The Stillwater Asset Backed Fund was the vehicle through which we
found the properties (we were approached for loans) and now our real estate division is very excited and optimistic on the prospects in West Palm Beach.
In 2 or 3 years we expect to sell Waterfront condos at more than $900 a
square foot.
We are building 4000 square foot Ultra-luxury apartments with incredible amenities.
Jack Doueck
Stillwater Asset Backed Strategies
My prediction is inflation in services and imported goods, deflation in RE and commodities.
2006 was the 4th best
2007 will be the 5th best
2008 will be the 6th best
2009 will be the 7th best
you get the point
Home Depot is a fiasco right now. This is due to the housing panic. Watch for furniture to fall. Pianos and safes will be next. A regular looney tunes.
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