LOS ANGELES (Commodity Online): Recovery in US construction sector which is set to expand significantly in 2013 and beyond would create increased demand for refined copper, zinc, lead , other non-ferrous metals in the next five years, according to a new report from IBISWorld.

The increase in domestic and overseas demand will bolster demand for refined copper, zinc, lead and other nonferrous metals over the next five years. Also in the coming years, the number of companies is forecast to decline slightly, increasing industry concentration. Currently, it has a medium level of concentration that reflects the fact that the highest-producing refineries source their material from the largest-producing mines in the United States, which are controlled by a small number of large companies. Major company Freeport-McMoRan owns and operates the Morenci mine in Arizona, which has the largest copper capacity in the United States. Major companies that own mine sites often sell mined ores and concentrates to other refineries, but they essentially control a significant volume of the production and refinement of copper, zinc and lead in the United States.

Refined copper, zinc and lead are sold almost exclusively on the basis of price; therefore, the performance of the Copper, Lead and Zinc Refining industry is closely tied to fluctuations in the market price of these and other nonferrous metals. “Over the past five years, the prices of these metals have been extremely volatile,” says IBISWorld industry analyst Sean Windle, “with double-digit declines in 2009, followed by skyrocketing gains in 2010.” For example, the price of copper, the industry's main product, fell 25.8% in 2009 before rising 45.9% in 2010. Despite this volatility and deep revenue losses during the recession, industry revenue as a whole has increased over the past five years. Thanks to mostly strong metal prices coming out of the recession, revenue has grown at an average annual rate of 4.2% to $18.7 billion in 2012.

Helping fuel post-recession industry growth is increased demand from foreign markets, especially China, India and other emerging economies. Over the past five years, Copper, Lead and Zinc Refining industry exports have risen at an average annual rate of 8.4%. In addition to shipping refined metal products overseas, industry operators also provide refining services to international clients on a fee basis, without actually owning the refined metal. According to Windle, “The growth in foreign demand has helped offset slow growth in domestic demand, which has been subdued by continued weakness in the US construction sector, the industry's number-one market.”