Did You Know? Dr Copper

The copper price has long been a reliable barometer of the health of the global economy - so much so that it attracted the moniker, Dr Copper. The red metal has ubiquitous application across most sectors of the economy, especially in the building industry, car production, electronics and power generation and transmission. New green technologies such as wind farms, electric vehicles and related charging infrastructure are also all copper intensive.

Rising copper prices typically reflect surging demand associated with economic growth. Falling prices suggest sluggish demand and that economic contraction could be on the horizon. The copper price is therefore one of the leading indicators of future economic growth.

The correlation is not foolproof. Increasingly, copper demand relates to the Chinese economy as China now consumes over half of the world’s copper supply. Taxes such as tariffs, supply disruptions, inventory levels, market speculation and fluctuations in the US dollar exchange rate can all lead to price changes that are unrelated to underlying demand dynamics.