TRADE IN COPPER BY THE SOVIET BLOC IN 1956 (SC RR 183)

Created: 3/7/1958

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I. Introduction

:: Import* from theorld

A. Volume

n.

Copper

Purchase" lor Commuein

Trenaporietlon Facilities

Transections for Processing Copper

Ul. Intra-Bloc

AEpcnd-.xea

Appandix A. Statistical .

AppeadixB.

Appendix C- Gaps iagcsee

. Source References

Tables

Deficit of Copper la the Sino-Sovisi

Summary of the Volume of imperii of Copper

from the Free World by the Sino-Soviet fl'.oc.

6

of trie Value of Import* of Copper

from the Free World by the Sino-Sovie! B'.oc,

6

of Imports of Copper from the Free World

by the Sino-Soviet Bloc.

of Import* of Copper from IX* Free World

by the Sino-Soviet Bloc.6

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TRADE fK COPPER 3Y THS STOP-SO VIST BLOC IN

Summary

Import* of copper from the Tree World by the The amount Imported exceeded the level5 by aboutercentercent of the new supply of copper in the Bloc.

Of particular significance were the Increased Imports of copper wire from the Free World by the USSR and Communist China. sv.f! importsmountedO tons..exceeding ihe level5 byercent. Communist China, which purchased this wirethrough Poland, reeftved0 tons, more thanimes the amount

The value of the copper imported from the Free World by the Sino-Sovlat Bloc6 amounted to6 million. The Increaseillion compared5 resulted primarily from the increase in the volume of imports. An Increase In the average price perowever, wasontributing factor.

The increase in Imports of capper by the Sino-Sovie: Bloc was made possible by conditions lr. the Free World, where the expansion of production exceeded the development of demand for copper, thus making additional quantities available for shipment to the Bloc.

Suction.

Since World War II the increased Industrialisation of theBloc has resultedonstantly increasing demand forwhich has more than offset the expansion of production. ir. copper has Increased every yearions6 and amounting to almostillionear period. of demand and production, to-

gether with the deficit,s shown tr. Table

" The estimates and conclusions contained in this reportthe best Judgment of ORR aa cat IB

Tonnages are given in metric tons throughout this report. Dollar value* are given in US dollars throughout this report.ollowe on p. 2.

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Table 1

Deficit ol Copper in the SinO'Sovict Bloc

Thousand Melric Tons

286

432

131

b/

c7

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The Sino-Soviet Bloc has attempted to meet this deficit partly through thc use of substitute materials and partly through thcof significant quantities of copper from stockpiles. Themethod of reducing the deficit, however) has been lo import ;opper from the'Free World.

Imports of copper from the Free World by the Sino-Soviet Bloc have increased steadily sincehen the Coordinating Committee on International Export Controls (COCOM) removed its embargo on exports to the Bloc of bare copper wireillimeters (mm} or less Inince that time. Imports of coppcrby the Bloc have been mainly in the form of such wire. ire of this type accounted for approximatelyercent of all the copper imported by the Bloc;pproximatelyercent; andpproximatelyercent. 4/

Contributing to the increased imports of copper by thc Sino-Soviet nior6 was the increased supply in the Free World. Theof copper in the Free World reached an all-time highmounting ton increaseons compared/ Thc demand for copper did not keep pace with thein produclion, and for the first time since thc beginning of the Korean War there was no deficit of copper in the Free World. 6/

* Thc members of COCOM are Belgium, Canada, Denmark, France, Greece. Italy. Japan, Luxembourg; the Netherlands, Norway, Portuga Turkey, thc UK. the US, and Weet Germany.

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The rise In prices during theonths6 continuedupward trend which had characterised the last quarterhereafter, at supply and demand became more closely balanced, prices dropped, and there was less fluctuation than during the first quarter of the year.

II. Imports from the Free World-A. Volume.

Imports of copper from the Free World by the Sino-Soviet Sloe increased significantlyxceeding those5ercent. omparison of imports56 IS shown in Table 2.

Table 2

Summary of the Volume of Imports of Copper from the Free.World by the Sino-Soviet56

Thousand Metric Tons

Form of Copper

"/

and cable

Covered

3

3

Unspecified

0

3

from Tableppendix A,

p.elow. The iotal "was derived from un* rounded data and is not the sum of the rounded components.

The substantial expansion of export* of copper from the Free World to the Sine-Sonet Bloc6 probably can be attributed to an improvement in the balance of the market for copper in the Free World. opper was scarce because the available productive capacity was not fully utilised. eries of strikes in Northern Rhodesia. Chile, and the US reduced (he output of mines substantially in the last half4 and These losses largely offset additions which the copper industry had made to its productive capacity inears, and it was not possible to meet the increasedof consumers in both the domestic and the foreign markets.owever, interruptions in production through labor difficulties were few and relatively unimportant. In addition, productive capacity continued to increase. 87

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Thesen the copper industry of the Free World cnsbled the Sino-Soviet Bloc to increase its imports from thc Free World Significantly Trade in copper wireew Ughmports by the USSR amounting0 tons.ore thannd imports by Communist China reachingons.

B. Value.

The dollar value of imports of copper from the Free World by the Sitio Soviet Bloc56 is shown in Table 3. The increase in the value of imports ol copper by the Blocmm the increase in the value of imports of bare wire and cable, both because of the additional tonnages of wire and cableduring the year and because of an increase In the estimated average price per ton.

Table 3

Summary of the Value of ImpoTts of Copper from the Free World by thc Slno-Soviet56

Million US $

Form of Copper

*J

W

and cable

4

rod

from Tableelow.

It Is retimated that the average price of bare copper wire and cable exported to the Sino-Soviet Bloc6 waserer ton more than the average price Largely responsible for this increase were the agreements for purchaece In the Free World made by the Bloc lateS or earlyhen prices for copper were at their highest levels. These high prices were the result of the relative scarcity of copper and the Mgh demand5 and lo the early part Competitive bidding by consumers forced prices upward far beyond any previous peak. Late In6 the price on the London Metal Exchange for refined bar copper

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7 per ion.* After March, however, the greater increase in produetion began to offset the rise tn demand, and the price for this product declineder ton at the end of the year.

1. Embargoed Copper.

Since4 the substantial increase in imports of bare copper wire by tbe Slno-Soviet Bloc has been accompaniedharp decrease in imports of forms of copper embargoed by COCOM. None of the principal exporters of embargoed copper to tho Blocember of COCOM, and consequently none is bound by the restrictions agresd to by this group. Exports of.copper from Finland to the USSR, Poland, and Communist China6 are provided for by current trade agreements, and future deliveries to these countries will be the subject of annual negotiations.

Exports of rolled copper from Austria to the USSR are part of the Auctro-Soviet reparations agreements and are .to be made. These shipments reportodlya.ro continued by Austria tn order to keep Soviet-Austrian relationsnd to maintain its position/

2- Polish Purchases for Communist China.

in

wire importer oy Communist China from the Free World was originally sold lo Poland and then consigned in Polish ships tohe Polish Import-export firm TRANSACTOR acts for the government of Poland in procuring this copper.

3. Transportation Facilities.

Aboutercent of thc copper wire imported by the Smo-Soviet Bloc from.tho Free World6 was carried on Soviet and Polish merchant ships. These ships traveled between ports of the Soviet Bloc on the Baltic Sea and ports of thc Free World on the European continent and in the UK.

Whereas Soviet ships appear to carry copper only to Soviet destinations, the Polish merchant ships serve as carriers of copper not only to Poland but also to other countries of the Siao-Soviet Bloe. opper io known to have been loaded on Polish ships in ports of thc Free World and to have been transshipped at Gdynia to the USSR.ndransportation to the Soviet Bloc for thc remaining importc of copper was accomplished principally by rail and by Inland waterway barge.

*arge number of negotiations concerning trade in copper between the Free World and countries of the Bloc are based on the prices quoted on the London Metal Exchange for refined copper plus the cost of procosi mg into wire.

For methodology, see Appendix 3.

4. Transactions for Processing Copper.

The pattern of trade In copper between the Free World and the Sino-Soviet Bloc includes transactions whereby copper raw materials are exported to the Bloc for processing. Thc cxtractable copper is converted into electrolytic copper which is shipped back to ths country of origin. These shipments are not includnd in thc total volume of Imports of copper by the Bloc from the Free World.

principal participants in such transactions6

were West Germany and East Germany, with West Germany utilising the facilities for processing copperiln East Germany. It la estimated That approximatelyons of copper residues' were shipped to East Germany From this Quantity, ons of.electrolytic copper cathodee were returned to West Germany.

Ul. Intra.Bloc Trade.

Although the Information concerning trade in copper within the Sino-Soviet Bloc is fragmentary, the pattern of this trade appear* generally to be adapted to the conditions set by the USSR. As the principal supplier and consumer within the Bloc the USSR presumably determinesonsiderable degree the amounts and types of copper traded and also the terms of trade. Because the production ofhe other countries of the "Bloc is relatively small, these countries must rely largely upon Imports from the USSR to cover needs for copper not provided by the Fre* World. The acope of trade within the Bloc therefore depends primarily on the exports of copper by the USSR.

With the exception of nxports of copper wire to Communiathich amounted toonsuch of the copper exported from theo other countries of the Bloc Is returned eventually to the USSR. This two-waytradeanifested principally in the trade In copper of the USSR with Cicchoelovekla and East Germany, the most industrialised of the European Satellite* and the largestof copper from the USSR. xports of copper from the USSR to Chechoslovakia are estimated atnd those to Eaat Germany athese countries returned ths copper to the USSRore usable form or aa products of their engineeringast Germany also processes copper raw materials for some of the other European Satellites, but none of these countries is an Important producer of copper, and such trade iselatively minor scale.

* The residues involved in these transactions are byproducts from thc smelting and refining of copper. The copper content of these residues is estimated atercent. IB/

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APPENDIX

METHODOLOGY

1. Volume and Value of Imports.

The research methods used in deriving the estimates for thiswere essentially the same as those employed in the report on trade in copper The results of the analysis based on thismethodology are shown innd These estimates were based partly or. data released by the exporting countries of Ihe Free World and partly on Information derived fron

Wherever possible, data from more than one source were compared to determine the reliability and completeness of these data, thusore accurate estimate.

The estimate for the average price of bare wire and cableb) was derived from the estimates of the volume and value of

imports by thcr.d e

estimate for the average price of copper in forms other thanand cable| was similarly derived.

2- Transportation Facilities.

Soviet and Polish merchant ships are estimated to haveercent of all the wire delivered to the Sino-Soviet Bloc

Wur'.d inNmllt via 5

Although thc dataa probable determination of the nationality of thethis wire can be derived. For example, all availableshipments bv water of cooncr wire from the UK andthcshowed Soviet

carriers, lt was assumed, therefore, that thc Soviet merchant flee: transported all of the copper wire exported from the UK and Belgium to the USSR. The information available also indicated that exports of copper wire to Poland by water were carried on Polish Ships. It was assumed that all of the copper wire shipped to Poland from the Free World by water, including that transhipped lo Communist China, was carried on Polish ships.

To the estimate derived by this methodology0as added the quantities of wjre:.transported ta other countries of

Sino-Soviet Bloc On Soviet or Polish Ships. The resulting figure isons, or approximatelyercent of tho total estimated volume Ol copper wire imported by the Bloc from the Free World in

Pp.espectively, abev,

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APPENDIX C

CAPS IN INTELLIGENCE

Information about trade in copper within the Sino-Soviet Bloc ii very fragmentary. eneral pattern of this trade can be identified, the data available are too incomplete to estimate accurately the volume or the value of the copper traded by each country.

The Information available on shipment* of copper transiting Free World ports en route to the Sino-Soviet Bloc is inadequate. Further details on transshipments of copper, including information fromports through which the copper transits, would improve the estimates of imports, not only by making available data more complete but also by facllluting the elimination of duplleatiot

Information on importe of copper wire and cable by theis more complete thanmports of other forms oflatter importselatively small percentage of theare important because they are subiect to export controls. of these formstransiting severalports, and more information on transit trade would helpthis important gap.

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