Copper Prices Explained

Copper price fluctuation counts on the health of the global economy. Power generation and transmission, construction, factory equipment, and electronics. These sectors in the economy use 50% of copper. For instance, the steady demand for copper from EV and renewable energy generation industries continuously fuels copper prices.

Therefore, the healthier the economy fares, the higher the demand for copper gets. However, this is not the only contributing factor to the copper price volatility as others come into play.

Why are copper prices fluctuating?

1. Copper Demand

Countries like China and the United States have driven the demand for copper for many years as copper is mainly used in most of their construction and remodeling projects. Additionally, the growth of other countries’ economies adds to the need for copper production. Conversely, a slow economic performance causes low demand for copper.

In short, the copper price movement relies heavily on the highs and lows of copper demand.

2. Supply Disruptions

Chile is the largest copper producer in the world, accounting for 27% of its overall production. But lately, the country has suffered strikes and political instability. 

First Quantum Minerals stopped copper production at the Cobre Panamá last November 2023 after the nationwide protest. Additionally, Anglo American (another major producer) announced a manufacturing cut in 2024 and 2025 as the company looks to downsize operations. Thus, Goldman Sachs analysts projected a tightened global supply, leading to $10,000 per ton copper prices within 2024 and much higher in 2025.

3. Technology and Product Substitution

The advancement of technology and the development of substitute materials threaten to put copper prices down in the market. For example, the rising demand for aluminum or fiber-optic cables as a cheap and reliable replacement for copper reduces its demand prices in the market.

4. Chinese Economy

Chinese economic deflation and the reduction of its copper import greatly affect the commodity’s prices. Additionally, the silent housing market in the country, particularly in 2023 influenced its construction industry.  However, its government started 2024 with developers’ better access to funding and the removal of purchasing restrictions. As a result, metal analysts predicted a bull market for copper prices.

Which variables impact the price of copper?

• Copper Demand
• Supply Disruptions
• Technology and Product Substitution
• Chinese Economy
• Geopolitical Factors
• Currency Exchange Rates
• Inventories

Where does copper come from?

Copper’s symbol is Cu and it is the basic known element naturally found in the Earth’s crust. This metal is abundant and relatively mined around the world.

Also, it is extracted from underground mines using explosives and heavy types of equipment. The copper metal undergoes tedious processing to reach its present product.

Generally, its main application goes to electrical wiring due to its excellent conductivity properties. Furthermore, its growing appeal in the renewable energy and EV sectors amplifies its importance. 

Presently, the top copper producers are Chile, Peru, China, the Democratic Republic of Congo, and the United States.

What is the future price of copper?

Green energy initiatives and the easing conservative copper purchase from Chinese developers will likely accelerate copper prices in the coming years.

Citibank cited that more than 60 countries backed a plan to triple global renewable energy capacity by 2030 at the recent COP28 climate change conference. This initiative can boost copper demand by an extra 4.2 million tons in the same year. Also, the closing of First Quantum Minerals (the world’s largest copper mines in Panama) after nationwide protests over environmental concerns will create a big deficit in the supply chain.

Therefore, these several factors all point to a copper trend upward which promises a bull run in the economy. Citi market analysts forecasted that copper prices will be around $10,756 per ton in 2030.