What influences the price of copper?


Quick Answer

Supply, demand and store are three factors that influence copper prices, states Amisy. What affects those factors varies from workers' strikes and natural disasters to futures trading, says Futures Knowledge.

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What influences the price of copper?
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Full Answer

Surplus copper exists when supply exceeds demand and lowers its price, says Futures Knowledge. However, any real or imagined threat to copper supply drives up its price. According to Amisy, about half the world’s copper comes from South America. In particular, Chile and Peru produce 42 percent of that supply, says Futures Knowledge. Events such as a mining strikes and natural disasters are quite common in the region and can push up prices.

The main consumers of copper are America, Western Europe, China and Japan, states Amisy. Their economic situation as well as how they store copper affects its price level. Demand for copper increases as more countries transition into the developed stage.

Futures prices indicate the present and future supply and demand, states Amisy. Demand trends dictate copper's short-term supply and demand. Threats to copper supply mean higher prices, says Futures Knowledge. For example, news about China, which consumes about 40 percent of the world’s copper, can raise or lower copper prices. This trend is accentuated when futures traders scramble to protect themselves after learning of an impending price decline.

Whenever industries substitute cheaper metals for copper it lowers copper prices, says Futures Knowledge. For example, aluminum has replaced copper in electrical equipment, power cables, cooling tubes and automobile radiators. The greater the availability of cheaper, substitute metals, the greater the demand for cheaper copper.

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