Will the economy and recycled copper put a lid on copper prices?

Often hailed as “Dr. Copper” for its ability to provide insight into the health of the global economy, copper stands at the intersection of multiple market dynamics. In the evolving commodity landscape, the interplay between economic forces and the availability of recycled copper has emerged as a key determinant of copper prices. As electric vehicles (EVs) and solar panels compete for a share of the copper supply for these applications, the relationship between economic indicators and the recycled copper market is critical to product pricing.

What factors influence the price of copper?

The interaction of economics and recycled copper prices can have a significant impact on overall copper prices. Here's how each factor affects copper prices:

economy: The state of the economy plays an important role in determining copper prices. Demand for copper comes from various industries such as construction, electronics, and manufacturing. Therefore, economic factors such as GDP growth, industrial production, new housing construction, and infrastructure spending are likely to drive demand for copper. Conversely, an economic downturn due to reduced industrial production and construction activity could reduce demand for copper and put downward pressure on prices.

recycled copper price: The availability and cost of recycled copper can also impact overall copper prices. Recycled copper, sourced from scrap metal, is an essential source for the copper industry. If the price of recycled copper is high, it may become economically viable for recyclers to supply recycled copper to the market, increasing the overall supply of copper and reducing upward price pressure. Conversely, low prices for recycled copper reduce incentives to recycle, which can impact overall copper supply dynamics.

technical

Source: bar graph

The monthly nearby copper futures chart reflects range-bound prices from 1960 to 2005, after which sustained urban construction and strong consumer spending in China led to significant increases in copper prices.

The 2008 housing crisis caused copper prices to plummet until 2009. The decline in overall economic activity was initially modest, but then sharply declined in the fall of 2008 as stress in financial markets reached its peak. From peak to trough, U.S. gross domestic product (GDP) fell 4.3%, the deepest recession since World War II.

The copper market went from a low in 2009 to a new high in 2011. From 2016 to 2021, prices showed a flat movement. As the stock market rises to an all-time high in 2022, demand in the copper market increases, pushing the price to an all-time high of $5.0395. A bear market has hit the US stock market, and copper prices have fallen. The stock market bottomed in October 2022, and the copper market bottomed in July 2022. Dr. Copper was a leading indicator of economic expansion.

Source: bar graph

Copper's weekly chart reveals a turning point in July 2022 before the stock market bottoms in October 2022. Copper prices have started to rise after consolidating. The weekly uptrend has brought prices back to near all-time highs.

Can the Bulls hit new highs?

Traders Commitment (COT) Report

Source: CMEGroup Exchange

The COT report reflects the position of managed money traders in the copper market. Recent reports show that we have the same number of long (blue bar) positions as before the 2022 all-time high. The yellow line reflects the copper price. Managed money traders typically tend to follow trends and seem to take more long positions before new all-time highs.

recycled copper

Did you know that nearly 20% of the world's refined copper supply comes from recycled materials? That's pretty amazing. Some of the copper products in use today were mined decades ago. This is because copper boasts an amazing recovery rate of nearly 90%. Most items brought to local scrapyards are stripped, melted down, and converted into new copper rods for production.

As demand for copper steadily increases, the argument for stronger recycling practices becomes even more persuasive. Currently, global copper consumption is approximately 28 million tons. However, according to the forecasts of copper company sources, this figure is expected to reach closer to 38-40 million tons by 2032.

Unless we find a way to extract more copper through mining or make recycling more attractive, this surge in demand for copper could quickly strain existing supply chains. Unfortunately, it typically takes 14 to 16 years to open a new mine, and advances in mining technology are relatively slow. Recycling may therefore emerge as the saving grace we urgently need now and in the near future.

Copper and other non-ferrous metals retain their chemical and physical properties through recycling. This property allows it to be recycled indefinitely without deteriorating its quality.

Higher copper prices lead to higher profit margins for recyclers. Recycling therefore reduces concerns about future copper supply shortages.

lastly….

Finally, the balance between economic indicators and the recycled copper market is a crucial determinant of copper prices and shapes the global commodity price landscape. Understanding these market dynamics is essential as industries such as electric vehicles and solar panels compete for a share of the copper supply. Economic conditions and the availability of recycled copper have a significant impact on the price of copper, with demand forecasts showing increased strain on the supply chain in the coming years. In this context, recycling has emerged as a key aspect to meet future demands and provides a sustainable solution to potential supply constraints. Copper and other non-ferrous metals are infinitely recyclable without compromising quality, so investing in recycling practices is key to ensuring a stable and robust copper supply chain for generations to come. .

While the demand for Dr. Copper will increase, the world will find ways to improve the supply needed for the global economy. With bullish asset managers pouring money into the copper market, it's not out of the question that prices could reach new all-time highs. However, copper prices are likely to find many commercial sellers not far from their all-time highs.

more stock market news from bar chart

On the date of publication, don dawson I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Summarize this content to 100 words
Often hailed as “Dr. Copper” for its ability to provide insight into the health of the global economy, copper stands at the intersection of multiple market dynamics. In the evolving commodity landscape, the interplay between economic forces and the availability of recycled copper has emerged as a key determinant of copper prices. As electric vehicles (EVs) and solar panels compete for a share of the copper supply for these applications, the relationship between economic indicators and the recycled copper market is critical to product pricing.What factors influence the price of copper? The interaction of economics and recycled copper prices can have a significant impact on overall copper prices. Here's how each factor affects copper prices:

economy: The state of the economy plays an important role in determining copper prices. Demand for copper comes from various industries such as construction, electronics, and manufacturing. Therefore, economic factors such as GDP growth, industrial production, new housing construction, and infrastructure spending are likely to drive demand for copper. Conversely, an economic downturn due to reduced industrial production and construction activity could reduce demand for copper and put downward pressure on prices.recycled copper price: The availability and cost of recycled copper can also impact overall copper prices. Recycled copper, sourced from scrap metal, is an essential source for the copper industry. If the price of recycled copper is high, it may become economically viable for recyclers to supply recycled copper to the market, increasing the overall supply of copper and reducing upward price pressure. Conversely, low prices for recycled copper reduce incentives to recycle, which can impact overall copper supply dynamics.technical Source: bar graph The monthly nearby copper futures chart reflects range-bound prices from 1960 to 2005, after which sustained urban construction and strong consumer spending in China led to significant increases in copper prices. The 2008 housing crisis caused copper prices to plummet until 2009. The decline in overall economic activity was initially modest, but then sharply declined in the fall of 2008 as stress in financial markets reached its peak. From peak to trough, U.S. gross domestic product (GDP) fell 4.3%, the deepest recession since World War II.The copper market went from a low in 2009 to a new high in 2011. From 2016 to 2021, prices showed a flat movement. As the stock market rises to an all-time high in 2022, demand in the copper market increases, pushing the price to an all-time high of $5.0395. A bear market has hit the US stock market, and copper prices have fallen. The stock market bottomed in October 2022, and the copper market bottomed in July 2022. Dr. Copper was a leading indicator of economic expansion.

Source: bar graph Copper's weekly chart reveals a turning point in July 2022 before the stock market bottoms in October 2022. Copper prices have started to rise after consolidating. The weekly uptrend has brought prices back to near all-time highs. Can the Bulls hit new highs? Traders Commitment (COT) Report Source: CMEGroup Exchange The COT report reflects the position of managed money traders in the copper market. Recent reports show that we have the same number of long (blue bar) positions as before the 2022 all-time high. The yellow line reflects the copper price. Managed money traders typically tend to follow trends and seem to take more long positions before new all-time highs. recycled copper Did you know that nearly 20% of the world's refined copper supply comes from recycled materials? That's pretty amazing. Some of the copper products in use today were mined decades ago. This is because copper boasts an amazing recovery rate of nearly 90%. Most items brought to local scrapyards are stripped, melted down, and converted into new copper rods for production.As demand for copper steadily increases, the argument for stronger recycling practices becomes even more persuasive. Currently, global copper consumption is approximately 28 million tons. However, according to the forecasts of copper company sources, this figure is expected to reach closer to 38-40 million tons by 2032. Unless we find a way to extract more copper through mining or make recycling more attractive, this surge in demand for copper could quickly strain existing supply chains. Unfortunately, it typically takes 14 to 16 years to open a new mine, and advances in mining technology are relatively slow. Recycling may therefore emerge as the saving grace we urgently need now and in the near future.

Copper and other non-ferrous metals retain their chemical and physical properties through recycling. This property allows it to be recycled indefinitely without deteriorating its quality.Higher copper prices lead to higher profit margins for recyclers. Recycling therefore reduces concerns about future copper supply shortages. lastly…. Finally, the balance between economic indicators and the recycled copper market is a crucial determinant of copper prices and shapes the global commodity price landscape. Understanding these market dynamics is essential as industries such as electric vehicles and solar panels compete for a share of the copper supply. Economic conditions and the availability of recycled copper have a significant impact on the price of copper, with demand forecasts showing increased strain on the supply chain in the coming years. In this context, recycling has emerged as a key aspect to meet future demands and provides a sustainable solution to potential supply constraints. Copper and other non-ferrous metals are infinitely recyclable without compromising quality, so investing in recycling practices is key to ensuring a stable and robust copper supply chain for generations to come. .While the demand for Dr. Copper will increase, the world will find ways to improve the supply needed for the global economy. With bullish asset managers pouring money into the copper market, it's not out of the question that prices could reach new all-time highs. However, copper prices are likely to find many commercial sellers not far from their all-time highs.
more stock market news from bar chart
On the date of publication, don dawson I had no position (directly or indirectly) in any of the securities mentioned in this article. All information and data in this article are for informational purposes only. Please see the Barchart Disclosure Policy for more information. here.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

https://www.nasdaq.com/articles/will-the-economy-or-recycled-copper-keep-a-lid-on-copper-prices Will the economy and recycled copper put a lid on copper prices?