What is ailing Dr. Copper? (2023)

What is ailing Dr. Copper? (1)

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Copper prices, which are said to follow the general economic trends most closely compared with other metals, have fallen steeply since April. Prices of the metal, which peaked at $4.94 per pound in March, were trending more than a dollar lower by July, averaging around $3.35 to $3.60 per pound after having fallen nearly 30 percent over a period of four months.

When viewed in tandem with other economic factors, this price erosion reflects a general downtrend in the global economy. For instance, U.S. gross domestic product (GDP) fell by 1.6 percent in the first quarter of 2022, which was followed by a decline of 0.9 percent in the second quarter, according to the advance estimate released July 28 by the Bureau of Economic Analysis.

China’s GDP during the second quarter of this year is estimated to have fallen by 2.5 percent compared with the first quarter, while its real estate investments and sales in the second quarter have declined by 9.4 percent and 18.3 percent, respectively, signaling an overall slowdown in the country’s economy, according to the Chilean Copper Commission (Cochilco).

Inflation, on the other hand, has shown no signs of slowing. In the U.K., inflation rose to 9.4 percent in June, its highest since February 1982, with motor fuel and food being the most significant drivers, according to country’s Office of National Statistics. Similarly, annual inflation in the eurozone and European Union increased to 8.6 percent and 9.6 percent, respectively, during the month, according to Eurostat, led by high energy prices.

June inflation in the U.S. reached a 40-year high at 9.1 percent, led by high fuel and food prices and soaring rents. On a monthly basis, U.S. inflation jumped by 1.3 percent from 8.6 percent in May, signaling rate hikes by the Federal Reserve in June and again in July. Still, economists remain optimistic that a fall in logistics costs and commodity prices could ease inflationary pressure on the U.S. economy.


These trends have weighed on metal prices, which have fallen by more than 30 percent over the second quarter compared with the preceding quarter, reflecting the steepest fall on a percentage basis since the financial crisis of 2008.

All the recessionary trends and a heavy selloff by commodity hedge funds to get ahead of a potentially looming recession led to this downtrend, according to market participants.

What is ailing Dr. Copper? (2)

Copper prices and the economy

The steep fall in copper prices has led commodities funds like Goldman Sachs, which had forecast prices for the metal touching $5 per pound by the end of 2022, to revise projections downward. The group recently amended its three-month forecast for the metal to $3.04 per pound ($6,700 per metric ton) compared with $3.92 per pound ($8,650 per metric ton).

Bank of America was even more bearish, projecting copper at $2.04 per pound ($4,500 per metric ton), citing a potential acute energy shortage in Europe such as the one in 2021 as a contributing factor.

The warning signs were in place at the end of the first quarter. Erik Norland, executive director at Chicago-based CME, noted during the American Copper Council’s Spring Meeting in May that rising interest rates had started affecting U.S. mortgage rates, which in turn would slow down U.S. construction, therefore affecting demand for metals such as aluminum and copper.

Indeed, construction in the U.S. has slowed since then. In June, housing starts declined by 6.3 percent to 1.56 million units from 1.66 million units annually and by 2 percent from 1.59 million units in May, U.S. Census Bureau data indicates. Month over month, June building permits and housing completions also shrank by 0.6 percent and 4.6 percent, respectively, to 1.69 million units and 1.37 million units.

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Production delays

Macroeconomic factors aren’t the only ones affecting the copper market. Mining production has declined in some of the key copper-producing regions between January and May, especially in South America.

The Portugal-based International Copper Study Group’s (ICSG’s) July data reveal a 6.4 percent decline in Chilean copper production between January and May because of low grades, an extended drought and labor scarcity. In Peru, social unrest and community blockades affected output at two of its biggest mines, Las Bambas and Cuajone, leading to a 0.3 percent fall in copper output during the period under review.

Still, these declines are being offset by ramp-ups in the Democratic Republic of Congo and at Freeport McMoran’s Grasberg mine in Indonesia. Mine production in both these regions grew by more than 30 percent in the first five months of this year.

Although refined copper production increased overall, the ICSG noted a considerable softening in refined copper production growth in China during the first five months of the year because of the country’s extended COVID-19 lockdowns between April and May.

Refined copper output in China grew by 1.8 percent between January and May, down from a growth rate of 3 percent ICSG reported from January to April.

What is ailing Dr. Copper? (3)

Impact on scrap

Lockdowns in China also have meant that copper scrap exports, especially from the U.S., came under pressure between April and May of this year, which, in turn, affected the metal’s prices.

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According to the U.S. Census Bureau, China’s imports of copper scrap from the U.S. declined by 25 percent to 8,837 metric tons in May compared with 11,743 metric tons in April.

Lower shipments from the U.S. to other Asian nations, such as Japan, Hong Kong and South Korea, offset the return of countries such as India and Taiwan to the market during May. As a result, ex-China exports to Asia fell by 15 percent to 2,162 metric tons from 2,547 metric tons.

High energy prices in Europe, along with a strong dollar, which reached parity with the euro earlier in July, meant that scrap exports to this region also suffered. In May, the U.S. exported 2,162 metric tons of copper scrap to Europe, down 15 percent from the 2,547 metric tons shipped in the preceding month, Census Bureau data indicate.

Low shipments and reduced copper prices have meant that export spreads for U.S. copper scrap also have widened gradually from their peak in March.

The Davis Index spread for No. 2 copper (birch/cliff), one of the most popular grades for Chinese importers, has widened from 38.4 cents per pound freight alongside ship (fas) U.S. ports at the beginning of March to 40 cents per pound fas at the beginning of July. Similarly, the Davis Index for yellow brass (honey) declined from a peak of $3.11 per pound fas U.S. port April 6 to $2.22 per pound July 20.

On the imports side, too, prices have softened. In Asia, the index for yellow brass has witnessed a steeper decline over this period, falling from $3.14 per pound ($6,930 per metric ton) cost, insurance and freight (cif) Asia port April 7 to $2.20 per pound ($4,851 per metric ton) cif Asia July 21. (See the chart on the previous page.) In India, the index for yellow brass imports has declined from $3.01 per pound ($6,634 per metric ton) April 7 to $2.16 per pound ($4,765 per metric ton) July 21.

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Market participants say they are of the view that prices will continue to remain depressed at least until fall, when more trading activity is anticipated.

Primary supply woes: The long-term view

The refined copper market ended last year with a deficit of 500,000 metric tons. According to an ICSG forecast, this market likely will see a surplus of 141,000 metric tons by the end of 2022 with a further increase to 352,000 metric tons by the end of 2023. Still, this forecast seems optimistic given the increasing demand for copper from the renewables and electric vehicles sector.

A recent study by IHS Markit, which is part of New York City-based S&P Global, notes that demand for copper will double by 2035 from 25 million metric tons in 2022. Demand will continue to grow to around 53 million metric tons by 2050 as more automotive solutions use this metal.

Supply, however, will lag demand, according to the study, with the deficit expected to reach nearly 9.9 million metric tons, even if recycling rates for copper remain at all-time highs. These projected deficits could put great strain on supply chains starting in the middle of this decade.

In the U.S., specifically, mine production has continued to lag amid slow approval rates for new mines and depleting resources at existing ones, making it dependent on importing primary copper. U.S. refined copper imports, according to the IHS Markit study, likely will increase by 57 percent by 2030, even with the highest consumption of copper scrap. Without copper scrap consumption, the imports for refined copper could go up by 60 percent.

This makes the addition of new secondary smelter capacity in the U.S. imperative. At present, companies such as Aurubis, Wieland and SDI La Farga are setting up new smelters in the country to process secondary feedstocks, such as scrap, that will add more than 140,000 metric tons per year in refined copper capacity to the market by 2024, which should help to keep copper prices stable.

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But a great deal can happen in the next five years, as seen by the most recent trends in the copper market. For now, the best prescription for Dr. Copper’s revival lies in a stronger global economy.

Radhika Ojha is senior editor, Davis Index, and copper analyst for the Americas region. She can be reached by email at radhika.ojha@davisindex.com.


Why do they call it Doctor copper? ›

The term Doctor Copper is market lingo for this base metal that is reputed to have a "Ph. D. in economics" because of its ability to predict turning points in the global economy.

What is today's price for copper? ›

Two crossed lines that form an 'X'.
UnitUSD per Ton
Date10/31/22 11:46 AM
6 more columns

Is copper a good economic indicator? ›

Because of its use across many sectors, copper is seen as a leading indicator of economic health. After all, it is used practically everywhere – in homes and in factories, in electronics and in power generation.

What is the symbol for copper on the stock market? ›

Copper (HG:CMX)

Is Dr copper pure copper? ›

Dr. Copper is made of pure copper and it is the Seamless Copper Bottle made through a unique patented technology.

What is the green coating over copper called? ›

Green deposit on the surface of copper is because of copper sulphate. Was this answer helpful?

Will copper prices go up in 2022? ›

The price is expected to decrease to $7,500 in 2022 and then grow to $8,250 by 2035. The IMF projects the growth of the copper price from an average of $6,174 per metric ton in 2020 to $8,313 in 2021, followed by a gradual decline to $7,600 per metric ton by 2026.

What is the highest price copper has ever been? ›

Historically, Copper reached an all time high of 5.02 in March of 2022. Copper - data, forecasts, historical chart - was last updated on November of 2022.

What is the highest paying scrap metal? ›

Copper is King

For most scrappers, copper is the king of scrap metal because it gains as much as $2 to $4 per pound. When it comes to scrap metal, that's a pretty high amount, especially compared to other metals like aluminum or brass.

What does the name copper stand for? ›

- Origin of the name. The name is derived from the Old English name 'coper' in turn derived from the Latin 'Cyprium aes', meaning a metal from Cyprus. Allotropes. Cu.

What is copper stand for? ›

Cu is the chemical abbreviation for Copper.

What is copper used for in medicine? ›

It helps your body make red blood cells and keeps nerve cells and your immune system healthy. It also helps form collagen, a key part of bones and connective tissue. Copper may also act as an antioxidant, reducing free radicals that can damage cells and DNA. Copper helps the body absorb iron.

What was copper originally called? ›

In the Roman era, copper was mined principally on Cyprus, the origin of the name of the metal, from aes cyprium (metal of Cyprus), later corrupted to cuprum (Latin). Coper (Old English) and copper were derived from this, the later spelling first used around 1530.


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