Why Copper Prices Are Seeing Such High Growth

Posted on: 10 December 2014

Even as the commodities market struggles in many areas, the last decade has been quite strong for copper. As of December 2014, prices are holding steady at roughly three times the values of 2004, and have seen even higher jumps in the last several years.

To where can this boost be traced? Consider this analysis from the International Business Times , first posted in January 2014, wherein they not only predict increased price points in the short term but also lay out a number of reasons for their expectation:

• Massive demand from the rapidly industrializing Chinese marketplace.

• Heightened percentages of total available copper tied up in long-term construction projects and electronics – both consumer and industrial.

• Flattened global rates of copper reprocessing, owing to everything from natural disasters, political turmoil, and increased export taxes in a number of countries.

What Makes Copper Such a Valuable Metal?

Humanity's use of copper stretches back thousands of years, and it enjoys a status as one of the planet's most useful and versatile metals. First used primarily for weapons, art, and tools, copper's combination of strength and flexibility, its resistance to corrosion, and its conductive properties have remained important in modern times for everything from wiring and plumbing to ball bearings and delicate electronics.

Copper is 100% recyclable and its quality does not diminish when melted down and reused – as much as 80% of all copper ever mined is still in circulation today – making even scrap a valuable commodity, as recycling remains the more economical option than extracting new metal from ore deposits.

Is Further Price Growth Really a Likely Scenario?

Economics 101 has taught us all about the basics of "supply and demand" – as commodities hit price peaks, it's only realistic that buyers will seek out cheaper alternatives and demand (and therefore, prices) will dip, right?

It's not quite as simple with copper. The world's population is increasing at an unprecedented rate, and as industrialization and urbanization spreads to more and more global marketplaces, the need for large-scale infrastructure and construction projects, as well as consumer electronics, is likely to tie up existing supplies of copper without eliminating demand. As worldwide needs rise and existing ore deposits become fewer and farther between as well as more difficult to extract, it's a relatively safe bet that this precious metal will be a highly prized commodity for many years to come. For more information about the growth of this valuable resource, or if you have questions about investing, contact a company like SJB Futures, LLC.