Copper price: Codelco says strong stomachs will be needed this year
Due to its widespread use in construction, communication and transport copper is a bellwether for the global metals industry.
Reuters reports Chile’s state owned copper producer Codelco CFO Thomas Keller said on Tuesday: “In general we think (copper prices) will be good this year, though subject to important fluctuations.”
The news came on the same day as copper fell to a fresh 4-month low of $3.50 a pound in New York trading on mounting worries about the global macro-economic outlook.
Today’s price is a more than 20% drop from historic highs hit at the end of July last year of a shade under $4.49 a pound.
2011 saw dramatic price collapses for copper. From the record high in July the metal plunged to $3.07 at the beginning of October, a 31% drop in little over two months. In September 2011 alone, the price dropped 26%, losing over $1/pound during the month.
During the US subprime mortgage crisis copper prices declined by more than two-thirds within six months – from $3.96 on June 30 2008 to $1.29 on the last trading day before Christmas of that tumultuous year.
Like many commodities copper’s fortunes are driven by the Chinese consumption boom over the last ten years.
Recent price volatility is in sharp contrast to historical trading patterns for copper. During the previous decade from May 1992 to May 2002 copper traded within a 60c band.
Copper’s price spikes up and down this year have caught the attention of industry observers with some saying that there are rogue traders operating in the market and that prices are being distorted by dominant players.