In the third quarter of the year 2009, the price of copper has increased to $3 per pound. This is three times the price that it was when the year had just begun. This $3 price had been caused because of the exceptionally low price after the economic recession in the year 2010. Although there were several reasons for the rush in copper prices in the year 2009, the reasons could be different for the future because many factors need to be taken into consideration on the copper prices.
Price inclination on short, medium and long term
The price of copper is unpredictable. The inclination of copper prices from the year 1970 to the year 2009 is usually down. Although the six-month inclination is up, the three- to five-year trend is variable. The rise from $1 to $3 in the year 2009 waspreceded by a 2008 push from $4. The upward and downward moves by 30 percent or more within a time period of two yearare not strange with the copper prices..
The demand and supply factors for copper
The prices of the commodities are mostly determined by the demand and supply. Excessive supply of copper reduces the pricewhile huge demand increases the prices. The supply of copper usually comes from the inventories and the production of the copper mines. But, the demand of copper comes from the users and the usage. Thus, the different kinds of usage copper may produce, the more will be the demand for copper.
The users and the producers of copper
It has been found that Chile manufactures one-fifth of the copper in the world. Chile, Canada, the United States and the formerUSSR produce half of the world output. The United States, Japan, Germany, the United Kingdom, China and the former USSRare the largest users of copper. Strikes, labor negotiations and other economic and political conditions in user and producer countries have great influences on the price of copper.
Different uses of copper
Copper has different kinds of uses. These may include automotive applications and housing. But, the main market is the electrical industry where it is used as wiring and as parts in electronics and telecommunications because of its conductivity. Since it is decomposition-resistant, it is used in cooking systems, solar heating, plumbing and radiators. Copper is strong, flexible, pliable and can be used in producing bronze and brass. It can be alloyed with nickel and silver. It is also used in coins and jewelry
Economic recession and growth
Copper is generally used by the developed countries due to its industrial use. As such, the demand for copper is affected by the world economy and by the automobile, electrical and housing industries. With the economic recession, the price of copper has diminished as the demand rate has declined. However, the prices will rise again when the economic condition will improve and the number of customers will increase.
Apart from this, there are seasonal factors that have a great influence on the copper prices. The prices are inclined to rise up as the housing and automotive industries may get ready for their summer and spring peak production, soften in the late summer and fall. The speculators have permanent effect on the copper prices, but can play roles in the temporary moves. Since the prices of copper are dollar-denominated, a weak dollar is usually good for copper prices.