IDEAS home Printed from https://ideas.repec.org/a/spr/minecn/v37y2024i2d10.1007_s13563-023-00401-2.html
   My bibliography  Save this article

Dynamic relationship between refined and scrap copper prices

Author

Listed:
  • Nilza Rivera

    (Universidad de Antofagasta)

  • Juan Ignacio Guzmán

    (Pontificia Universidad Católica de Chile)

Abstract

In this paper, we explore the relationship between refined and scrap copper prices, considering the possibility that this relationship may vary across various products and over time. Building upon the conjecture put forth by Phillip Crowson (Miner Econ 24(1):1-6, 2011), here referred to as the Crowson Conjecture, our study aims to investigate how the substitution between refined copper and copper scrap No. 1 and No. 2 can impact the prices of each other. To achieve this, we develop a theoretical model that allows us to understand the potential influence of substitution between refined copper and copper scrap No. 1 and No. 2 during different time periods. Additionally, we conduct an empirical test using monthly time series data spanning from January 2004 to June 2022, analyzing structural breaks in these prices. Our empirical analysis successfully identifies three distinct structural breaks: January 2004 to August 2009, September 2009 to July 2017, and August 2017 to June 2022. These breaks serve as critical time periods for measuring Granger causality between the examined prices. Interestingly, our findings indicate that the causal relationships between the refined and scrap copper prices change throughout these three analyzed breaks, providing evidence in support of Crowson Conjecture. By shedding light on the evolving nature of the relationship between refined and scrap copper prices, our study contributes to a deeper understanding of the dynamics within the copper market. These insights have implications for market participants and policymakers, enabling them to make more informed decisions regarding pricing and resource allocation strategies.

Suggested Citation

  • Nilza Rivera & Juan Ignacio Guzmán, 2024. "Dynamic relationship between refined and scrap copper prices," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 37(2), pages 381-392, June.
    • Handle: RePEc:spr:minecn:v:37:y:2024:i:2:d:10.1007_s13563-023-00401-2
    DOI: 10.1007/s13563-023-00401-2
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s13563-023-00401-2
    File Function: Abstract
    Download Restriction: Access to the full text of the articles in this series is restricted.
    File URL: https://libkey.io/10.1007/s13563-023-00401-2?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Jushan Bai & Pierre Perron, 1998. "Estimating and Testing Linear Models with Multiple Structural Changes," Econometrica, Econometric Society, vol. 66(1), pages 47-78, January.
    2. Fisher, L. A. & Owen, A. D., 1981. "An economic model of the US aluminium market," Resources Policy, Elsevier, vol. 7(3), pages 150-160, September.
    3. Radetzki, Marian & Eggert, Roderick G. & Lagos, Gustavo & Lima, Marcos & Tilton, John E., 2008. "The boom in mineral markets: How long might it last?," Resources Policy, Elsevier, vol. 33(3), pages 125-128, September.
    4. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    5. Rivera, Nilza & Guzmán, Juan Ignacio & Jara, José Joaquín & Lagos, Gustavo, 2021. "Evaluation of econometric models of secondary refined copper supply," Resources Policy, Elsevier, vol. 73(C).
    6. Williams,Jeffrey C. & Wright,Brian D., 2005. "Storage and Commodity Markets," Cambridge Books, Cambridge University Press, number 9780521023399.
    7. Aruga, Kentaka & Managi, Shunsuke, 2011. "Price linkages in the copper futures, primary, and scrap markets," Resources, Conservation & Recycling, Elsevier, vol. 56(1), pages 43-47.
    8. John E. Tilton, 2018. "Assessing the market power of mineral commodity producers," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 31(1), pages 71-76, May.
    9. Jaunky, Vishal Chandr, 2013. "A cointegration and causality analysis of copper consumption and economic growth in rich countries," Resources Policy, Elsevier, vol. 38(4), pages 628-639.
    10. Toda, Hiro Y. & Yamamoto, Taku, 1995. "Statistical inference in vector autoregressions with possibly integrated processes," Journal of Econometrics, Elsevier, vol. 66(1-2), pages 225-250.
    11. Bhatia, Vaneet & Das, Debojyoti & Tiwari, Aviral Kumar & Shahbaz, Muhammad & Hasim, Haslifah M., 2018. "Do precious metal spot prices influence each other? Evidence from a nonparametric causality-in-quantiles approach," Resources Policy, Elsevier, vol. 55(C), pages 244-252.
    12. Phillip Crowson, 2011. "Mineral reserves and future minerals availability," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 24(1), pages 1-6, July.
    13. Lei, Yalin & Cui, Na & Pan, Dongyang, 2013. "Economic and social effects analysis of mineral development in China and policy implications," Resources Policy, Elsevier, vol. 38(4), pages 448-457.
    14. Gomez, Fernando & Guzman, Juan Ignacio & Tilton, John E., 2007. "Copper recycling and scrap availability," Resources Policy, Elsevier, vol. 32(4), pages 183-190, December.
    15. Slade, Margaret E., 1980. "An econometric model of the U.S. secondary copper industry: Recycling versus disposal," Journal of Environmental Economics and Management, Elsevier, vol. 7(2), pages 123-141, June.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Rivera, Nilza & Guzmán, Juan Ignacio & Jara, José Joaquín & Lagos, Gustavo, 2021. "Evaluation of econometric models of secondary refined copper supply," Resources Policy, Elsevier, vol. 73(C).
    2. Sourabh, Shalinee & Pavithran, Sagar & Menon, Balagopal G. & Mahanty, Biswajit, 2023. "Econometric modeling for the influence of economic variables on secondary copper production in India," Resources Policy, Elsevier, vol. 86(PB).
    3. Nilza Rivera & Juan Ignacio Guzmán & Gustavo Lagos, 2023. "A method to estimate the robustness of the secondary refined copper supply function," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 36(2), pages 255-277, June.
    4. Kumar, Nikeel Nishkar & Patel, Arvind, 2023. "Nonlinear effect of air travel tourism demand on economic growth in Fiji," Journal of Air Transport Management, Elsevier, vol. 109(C).
    5. Shinhye Chang & Rangan Gupta & Stephen M. Miller, 2018. "Causality Between Per Capita Real GDP and Income Inequality in the U.S.: Evidence from a Wavelet Analysis," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 135(1), pages 269-289, January.
    6. Carlos Alberto Carrasco, 2016. "Causality between external balance and (some) fiscal variables: Preliminary results for the Eurozone," Economics and Business Letters, Oviedo University Press, vol. 5(3), pages 80-86.
    7. Kayhan, Selim & Adiguzel, Uğur & Bayat, Tayfur & Lebe, Fuat, 2010. "Causality Relationship between Real GDP and Electricity Consumption in Romania (2001-2010)," Journal for Economic Forecasting, Institute for Economic Forecasting, vol. 0(4), pages 169-183, December.
    8. Musah, Mohammed & Onifade, Stephen Taiwo & Ankrah, Isaac & Gyamfi, Bright Akwasi & Amoako, George Kofi, 2024. "Achieving net-zero emission target in Africa: Are sustainable energy innovations and financialization crucial for environmental sustainability of sub-Saharan African state?," Applied Energy, Elsevier, vol. 364(C).
    9. Demetrescu, Matei & Georgiev, Iliyan & Rodrigues, Paulo M.M. & Taylor, A.M. Robert, 2022. "Testing for episodic predictability in stock returns," Journal of Econometrics, Elsevier, vol. 227(1), pages 85-113.
    10. Bartosz Jóźwik & Betül Altay Topcu & Mesut Doğan, 2024. "The Impact of Nuclear Energy Consumption, Green Technological Innovation, and Trade Openness on the Sustainable Environment in the USA," Energies, MDPI, vol. 17(15), pages 1-17, August.
    11. Gilbert, Christopher L. & Mugera, Harriet K., 2017. "The effects of US biofuels policy: A structural break analysis of the WTI pass-through to the corn price," 91st Annual Conference, April 24-26, 2017, Royal Dublin Society, Dublin, Ireland 258646, Agricultural Economics Society.
    12. Clement Bonnet & Samuel Carcanague & Emmanuel Hache & Gondia Seck & Marine Simoën, 2019. "Vers une Géopolitique de l'énergie plus complexe ? Une analyse prospective tridimensionnelle de la transition énergétique," Working Papers hal-02971706, HAL.
    13. Thomas Bittmann & Jens‐Peter Loy & Sven Anders, 2020. "Product differentiation and cost pass‐through: industry‐wide versus firm‐specific cost shocks," Australian Journal of Agricultural and Resource Economics, Australian Agricultural and Resource Economics Society, vol. 64(4), pages 1184-1209, October.
    14. Yildirim, Ertugrul & Aslan, Alper & Ozturk, Ilhan, 2012. "Coal consumption and industrial production nexus in USA: Cointegration with two unknown structural breaks and causality approaches," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(8), pages 6123-6127.
    15. Chen, Wu & Wang, Minxi & Li, Xin, 2016. "Analysis of copper flows in the United States: 1975–2012," Resources, Conservation & Recycling, Elsevier, vol. 111(C), pages 67-76.
    16. Gustavo Lagos & David Peters & Marcos Lima & José Joaquín Jara, 2020. "Potential copper production through 2035 in Chile," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 33(1), pages 43-56, July.
    17. Koji Tokimatsu & Shinsuke Murakami & Tsuyoshi Adachi & Ryota Ii & Rieko Yasuoka & Masahiro Nishio, 2017. "Long-term demand and supply of non-ferrous mineral resources by a mineral balance model," Mineral Economics, Springer;Raw Materials Group (RMG);Luleå University of Technology, vol. 30(3), pages 193-206, October.
    18. Kanjilal, Kakali & Ghosh, Sajal, 2017. "Dynamics of crude oil and gold price post 2008 global financial crisis – New evidence from threshold vector error-correction model," Resources Policy, Elsevier, vol. 52(C), pages 358-365.
    19. Jinghua Wang & Geoffrey Ngene, 2018. "Symmetric and asymmetric nonlinear causalities between oil prices and the U.S. economic sectors," Review of Quantitative Finance and Accounting, Springer, vol. 51(1), pages 199-218, July.
    20. Dan Lupu & Mihai Bogdan Petrisor & Ana Bercu & Mihaela Tofan, 2018. "The Impact of Public Expenditures on Economic Growth: A Case Study of Central and Eastern European Countries," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 54(3), pages 552-570, February.

    More about this item

    Keywords

    Structural breaks; Causality; Copper scrap; Price transmission; Secondary production;
    All these keywords.

    JEL classification:

    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices
    • L72 - Industrial Organization - - Industry Studies: Primary Products and Construction - - - Mining, Extraction, and Refining: Other Nonrenewable Resources

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:spr:minecn:v:37:y:2024:i:2:d:10.1007_s13563-023-00401-2. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.