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Show r i - L - - , i -i-; .sS REVIEWING THE COPPER INDUSTRY 1 The copper industry in 1980 has ex-' ex-' perienced a very unusual and eventful year. In the first quarter, owingUargely to record metal prices, the copper producers turned in excellent performances. per-formances. However, when the recession began to be felt in the second quarter, profits began to slide. Then on July 1 copper producers were hit with an industrywide strike. In late August Kennecott largest of the U.S. producers achieved a tentative ten-tative three-year labor pact with the striking workers. And subsequently Inspiration Consolidated Copper followed suit. But it was not until mid-November mid-November that all eleven U.S. copper . companies finally reached agreements. A COSTLY STRIKE It is estimated that the lengthy copper strike cost the industry well over $100 million. It was one of the industry's longest and costliest, resulting in an expected 39 percent wage increase over a three-year period. This makes copper workers now among the highest paid in U.S. industry. Because of this, producers now fear they will become less competitive com-petitive with producers in Chile, Zaire, and other copper producing countries abroad. The majority of metal dealers and copper users did not suffer from the strike to any extent because the walkout had been widely anticipated and ' they had stocked up. Most customers received their metal from producers well in advance of scheduled dates. UPS AND DOWNS OF COPPER PRICES In September- and October when producers' stocks of copper began to get somewhat tight, the price of copper began to rise. But, as some companies began to come to terms with the workers, copper prices began to ease. Then last month when the strike was finally settled the price was lowered further by several companies. Actually the quote for copper is now just about where it was prior to the lengthy work stoppage. A LOOK AHEAD Although this is proving to be a "down" year for the leading copper producers, we feel that 1981 will be considerably better. This projection is , based on an anticipated recovery by the building and construction industry. Due to copper's high electrical conductivity and corrosion resistance, the construction con-struction industry is the largest user of the red metal. In the general area of construction, solar energy appears to hold excellent potential for the copper industry. The Copper Development Association projected a 25 percent increase in sales of solar energy systems for 1980. And a $4-billion to $5-billion annual solar energy industry is looked for by 1990. Copper has maintained a dominance in this industry because about 75 percent of all solar collector manufacturers use only copper due to its superior heat transfer qualities, its resistance to air and water corrosion, and its easy acceptance of energy-absorbing energy-absorbing coatings. Two other growth areas for copper are consumer electronics elec-tronics and appliances. Both of these sectors are already heavy users of the metal. HOLD THE STOCKS In view of the expected improvement in economic conditions and in copper activity in 1981, the Research Department Depart-ment of Babson's Reports advises holding the stocks of the leading copper companies: AMAX Inc., Asarco, Atlantic Richfield (Anaconda), Inco Ltd., Kenencott Corporation, the nation's largest copper firm, Louisiana Land & Exploration (Copper Range) and Phelps Dodge, the second largest U.S. producer. Even though the outlook is for earnings betterment, purchases are not now being recommended as the stocks do not appear to be in buying ranges. |