More Inflation, More Copper Theft

Via Schiffgold.com,

When unemployment and inflation cause skyrocketing incentives for thieves to steal industrial metals like copper, criminals rush for some of the biggest sources: critical infrastructure. That includes cell towers, water pipes, street lights, and rail lines. These copper heists threaten transportation, communication, municipal services, urban safety, and other essentials of modern life. 

The chaos they can cause can cost lives, too — for example, copper heists from railways can cause warning lights, intersection gates, and turnouts that divert trains to other tracks to go offline.

World Bank analysts estimated that prices for base metals like copper and tin had peaked last year, and will decline further in 2024. Some reasons they cited included improving supply and decreasing demand due to widespread adoption of green energy initiatives, and a 52% reduction in the coal price in 2023 compared to the previous year. The report noted that high inflation will reduce demand, will it be enough to offset the speed at which fiat currencies are drained of their purchasing power? So far, the answer appears to be no.

If dollar inflation continues sufficiently unabated, the relative price of copper could continue to rise despite other factors. Other unexpected wrenches in the economy, like the recent closure of the Port of Baltimore, could also challenge the World Bank’s predictions. The Port of Baltimore was one of the US’s main exporters of coal, which could cause upward pressure on the global price of energy in an already-inflationary environment, and make metal smelting operations more expensive.

Copper futures dipped in May, after the World Bank released its report, but rose to a higher low in February, and have since been trending upward:

Copper Futures (USD/Lbs), April 2023 – March 2024

And as metal prices soar, so have incidents of theft that damage crucial infrastructure and multiply existing economic damage. Freight train accidents and delays, power and cellular blackouts, municipal sewer damage, and flooding and drainage issues from stolen gutters and pipes are just a few of the problems caused by 2024’s surging copper theft across America and the world.

Even real estate development projects can go over budget or become severely delayed when thieves snatch copper building materials from construction sites. The problem is so bad that in Los Angeles, a city councilmember declared the city is being “stripped” like an abandoned car:

Also at risk are electric vehicle charging stations, which have been proliferating around the country. Although they only contain a small amount of copper that can be extracted, meaning very little profit for thieves, their opportunistic mischief requires an expensive fix — especially for EV stations that are repeatedly targeted and need to be continually repaired or replaced.

One other underappreciated danger for copper when prices are skyrocketing due to economic uncertainty: inside jobs by bad apples at copper suppliers and storage facilities, which can lead to thefts on a grand enough scale that they affect the broader metals market. When they do, it helps incentivize further waves of small-time theft that damage infrastructure and victimize businesses that rely on the metal.

Angela Seidler is a PR representative for Europe’s number one copper producer in Germany which was caught in one such scandal. She explained to Bloomberg:

“What we currently know is that some of our recycling suppliers appear to have manipulated details about the raw materials they deliver to us, and they have been working with employees in our sampling department to hide the shortfall.”

And when thieves are desperate, nothing is sacred. Not even statues of civil rights leaders or copper headstones in graveyards are safe from the temptation of an easy flip when prices are too high for criminals to ignore. And while these sorts of thefts don’t endanger infrastructure, they’re a sign of the times and a unique indicator that the US dollar and economy are in troubled shape.