On Monday the New York Times ran a very good portrait of a Detroit metal scrapper going about his business, scrounging for metal and seeking places to sell it. Business isn’t what it used to be, the Times tells us, mostly thanks to a spate of law enforcement measures that make it harder to fence scrap – especially copper wire and plumbing – from abandoned buildings. The proof is in the data: Detroit issued 222 warrants for scrap metal theft in 2012. This year, it’s issued “around 25.”
It’s not just Detroit. The UK’s Local Government Association points to the 2013 passage of a Scrap Metal Dealers Act as the reason that there were “only” 40,680 metal thefts in England and Wales in 2014, compared to 59,788 in 2013. Likewise, last May the US’s National Insurance Crime Bureau [NCIB] revealed that insured metal theft had declined 26% between 2011 and 2013, from 14,676 cases to 10,807 – and it pointed specifically to legislation and law enforcement as the restraining factor.
No doubt, law enforcement has played an important role in restricting the easy options for metal thieves to fence scrap. But I’d argue the more important reason metal theft – especially copper theft – has declined over the last three years is embodied in the chart I’ve pasted below (click to enlarge). It shows the price of copper, dating back to its five year highs in early 2011 – and its precipitous, nearly 50% decline ever since (mostly thanks to falling Chinese demand). The price of scrap copper, including wires pulled from your home’s walls, is based on these prices:
At those prices, it’s probably still worth scrapping if you’re desperate – like the fellow profiled by the NYT. But for criminals who might have other options (including other options for selling it), the difference between $4/lb copper and $2.50/lb copper is probably big enough to make you think twice about breaking into an abandoned house to pull out its wiring.
That’s not to denigrate the work of law enforcement. They’ve played a crucial role in making the cost/benefit less attractive to thieves with access to $2.50/lb copper. But I do question just how much of a role those efforts played at a time when metal prices (not just copper) are in the midst of a three year bear market. What happens when (not if) the price of copper gets back to $4? Will those measures be effective? My guess is that they will be, but only marginally. In other words: when copper starts moving up again, so will the theft, and law enforcement will be far less ready than it thinks.
One other factor worth touching on – and which gets brief mention in the NYT piece: there’s simply less scrap metal out there (something that I’ve heard in conversation with the legitimate scrap metal dealers with whom I speak regularly). This makes sense, of course. At some point, Detroit’s scrappers will have stripped out as many houses and businesses as is physically possible. Nonetheless, one thing you learn after a lifetime around scrap metal (mine, as partly documented in Junkyard Planet) — where there’s a market, there’s scrap. And right now, the market stinks.
[P.S. If you’re interested in seeing what metal theft looks like firsthand, and how it’s related to globalization and commodity prices, click over to “American Scrap,” a segment that I co-produced for the second season of the Vice on HBO news magazine last year. Or you can pick up a copy of my Junkyard Planet: Travels in the Billion Dollar Trash Trade.]