There has been a lot of news last week on copper hits 6 weeks high. But what does it mean?
There has been concern that the Chinese tariffs will be impacting overall growth and therefore it is important to keep an eye on indicators of global economic health. One of which is the copper price. US and china are the two nations that are very large buyers of copper. There heath of the world’s two largest economies has a strong influence on Copper. However, last week, investors viewed that the Sino-US trade conflict would be less damaging to global growth than initially feared.
Copper is a metal that is used in every stage of the industrialization process. From wiring and plumbing or used in cars and airplanes. It’s relatively inexpensive but the “center piece” of any emerging or expanding industrial economy. So demand in copper and copper price is an indicator of how the economy overall is performing.
The chart shows the price of Copper over the last 11 years. As you can see price dropped dramatically towards the end of 2008 during financial crisis and decline of the housing market. Then it recovered during the middle of the 2000s led to advanced uses of aluminum as substitute in power cables. Then we did have quite an extended period of strength from 2016 onwards. That’s following the election of Donald Trump and following the implementation of a number of his growth boosting policies. However, this year to date after the imposition of the Chinese tariffs there has been a period of weakness in the copper price.
But if you look closely at the end of this chart – it does appear that the trend is starting to reverse and if it does do go up the other way that could be a positive indicator for global economic health and also it could be potentially good news for copper mining companies.
Credit: https://www.nasdaq.com/markets/copper.aspx?timeframe=10y
Comments