Copper is an international traded commodity and its price is effectively determined by the major metals exchanges-the London Metal Exchange[LME],the New York Commodity Exchange[COMEX],and the Shanghai Futures Exchange{SHFE].Prices on these exchanges generally reflect the worldwide balance of copper supply and demand, and can be volatile and cyclical. In general, demand for copper reflects the rate underlying world economic growth,particulary in industrial production and construction. According to Wood Mackenzie, a widely followed independent metals market consultant, copper’s end-use markets[and their estimated shares of total consumption]are construction[31 percent],consumer products[24 percent],electrical applications[24 percent],transportation[11 percent]and industrial machinery[10 percent].
Copper’s physical attributes include superior electrical conductivity,corrosion,resistance,structural capability, efficient heat transfer and aesthetics. Other materials that compete with copper include aluminium,plastics,stainless steel and fiber optics. Substitution of competing materials has been modest because it is difficult to duplicate copper’s unique characteristics.
Copper consumption is closely related to industrial production, and therefore tend to follow economic cycles. During an expansion, demand for copper tends to increase, thereby driving up the price. As a result, copper prices are volatile and cyclical.
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