From wiring and plumbing to electric vehicles (EVs) and electronics, base metal copper is key for a range of important applications in various industries. In fact, it’s even earned the moniker “Dr. Copper.”
That’s because copper’s widespread uses make it a valuable indicator for global economic health. Knowing what drives copper prices today is therefore helpful for investors who are focused on the bigger picture for copper.
The London Metal Exchange (LME) three month futures price also set a new all-time high that day of US$11,104 per MT.
With that in mind, what should investors know when tracking the copper price today? The following four factors have major impacts on supply and demand dynamics for copper products.
Spikes in demand from China have led to numerous jumps in copper prices over the years, while pullbacks in the second largest global economy have translated into dramatic slides in the price of the industrial metal.
Copper managed to hit a then record-high price of US$5.02 per pound in March 2022 on fears of supply chain disruptions following Russia’s invasion of Ukraine. However, softer demand from China’s real estate sector continued to weigh on the market throughout the second half of 2022 and much of 2023, placing downward pressure on copper prices. By mid-October 2023, the price of copper had dropped to a low of US$3.56 per pound.
As of mid-June, the red metal was trading at around US$4.50 per pound.
From renewable energy and storage applications to EVs and charging infrastructure, copper’s conductive properties have given it an important role in the energy transition, which is gaining steam worldwide.
“This is very important, because the world is now challenged to replace electric systems and energy systems that the last 150 years have underpinned all economic development,” he explained to the audience.
Mine disruptions are another important influence on copper prices.
In 2020 and 2021, the main cause for mine disruptions was the operational shutdowns resulting from the COVID-19 pandemic. Copper-mining operations in Chile, Peru and Mexico experienced the worst of it.
Rising copper inventories can weigh on the metal, while falling inventories can boost the copper price.
So how much should investors pay attention to copper stockpiles?
“Stockpiles in China usually follow a distinct seasonal patter, with strong builds at the start of the year, followed by equally rapid drawdowns from about March onwards,” notes the news agency. “However, this year is different, with ShFE warehouses continuing to see huge inflows at a time when they are normally shipping metal out.”
Kevin Murphy, director of metals and mining research at S&P Global Commodity Insights, believes economic uncertainty is exacerbating an already years-long lack of investment in copper deposit exploration and development.
This is an updated version of an article originally published by the Investing News Network in 2015.
Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
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