Copper Has Been Steadily Climbing, What Are the Factors?

Published on: Apr 17, 2024
Author: Amy Liu

As of 9:00 a.m. ET. on April 15, 2024, the copper price has increased by 10.86% this year, reaching a 52-week high of $4.39 per pound, while the 52-week low on October 23, 2023, dropped to $3.52 per pound.

Technically, copper is classified as a base metal with widespread industrial applications and richer reserves compared to precious metals. However, copper is often quoted alongside true precious metals like gold, silver, platinum, and palladium.

What are the factors influencing the copper price?

Like many commodities, copper prices are greatly influenced by short-term and long-term supply and demand factors. China is one of the largest consumers of copper, and its economic activities have a significant impact on global copper prices. China’s rapid industrialization and urbanization have increased the demand for copper, which is widely used in construction and manufacturing. Therefore, any fluctuations in China’s economic growth or industrial policies can have a significant impact on global copper demand.

Copper is primarily traded in US dollars, which also plays a crucial role. Currency fluctuations can affect copper prices. When the US dollar strengthens, copper becomes more expensive when calculated in other currencies, potentially reducing demand. Conversely, a weakening US dollar can make copper seem cheaper to buyers using other currencies, stimulating demand.

The ongoing transition to clean energy is another important factor influencing copper prices. Copper is a vital component of the electrification of the economy, including electric vehicles, wind and solar energy systems, and the infrastructure needed to support these technologies. As the world moves towards clean energy, the demand for copper is expected to increase.

Furthermore, mining productivity and government reserves can also impact copper prices. Supply disruptions in copper mining caused by strikes, accidents, or environmental factors can lead to tight supply and price increases. Similarly, decisions by major copper-producing countries to release or withhold copper from their national reserves can affect global prices.

Recently, the transition to green technologies has become a major driver of future copper demand. As the world moves away from fossil fuels, copper is crucial for electric vehicles, renewable energy systems, and other technologies.

Base Metals Copper Mining Personal Finance