Copper is one of the most important commodities today. Its production and

consumption is closely related with the macroeconomy, and therefore its price

often acts as a “barometer” accordingly, a function that has given the metal the

moniker of “Doctor Copper.”

There are three major factors that influence the copper price. First, fundamentals

of supply and demand. In the medium- and long-term, copper price is negatively

correlated with the supply of copper concentrates and changes in treatment and

refining charges (TC/RC), and positively correlated with changes in consumption

level. Other factors that affect supply and demand are seasonal changes in the

operating rate of copper downstream industries, changes caused by policies on

recycled copper as well as the domestic and overseas inventories.

Second, macroeconomic factors. Generally, the fact that the copper price

will be affected by the macroeconomy to some extent shows certain financial

attributes, and is negatively correlated with the U.S. dollar index in most cases.

Domestically, changes in interest rates, social financing and M1/M2 are always

regarded as observing indicators for financial operation and currency liquidity,

and the corresponding changes in demand as well as the periodic expectations

for inflation will also affect the copper price fluctuation.

Third, unforeseen events. The outbreak of COVID-19 at the beginning of 2020

is one such example: the copper price dived in response to the stalled global

economy. In addition, earthquakes or accidents at copper mines or strikes at a

mine or a smelter would reduce the expected supply, and therefore drive up the

price.

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