Copper

The word copper comes from name of the Mediterranean island Cyprus that was a primary source of the metal. Dating back more than 10,000 years, copper is man’s oldest metal. From the Pyramid of Cheops in Egypt, archeologists have recovered a portion of a water plumbing system whose copper tubing was found in serviceable condition after more than 5,000 years.

Copper is one of the most widely used industrial metals because it is an excellent conductor of electricity, has strong corrosion-resistance properties, and is very ductile. It is also used to produce the two alloys of brass (a copper-zinc alloy) and bronze (a copper-tin alloy), both of which are far harder and stronger than the pure metal. Electrical uses of copper account for about 75% of total copper usage and building construction is the single largest market. Copper is biostatic, meaning that bacteria will not grow on its surface, and is therefore used in air-conditioning systems, food processing surfaces, and doorknobs to prevent the spread of disease. Today the copper content of US coins is 2.6% for the penny, 75% for the nickel, and 91.67% for the dime, quarter, and half dollar. Known worldwide resources of copper are estimated at nearly 5.8 trillion pounds, of which only about 0.7 trillion (12%) have been mined.

Copper futures and options are traded on the London Metal Exchange (LME) and the COMEX Division of the New York Mercantile Exchange (NYMEX). Copper futures are traded on the Shanghai Futures Exchange. The Comex copper futures contract calls for the delivery of 25,000 pounds of Grade 1 electrolyte copper and is priced in terms of cents per pound.

Prices – Comex copper futures prices traded sideways in the first half of 2003 but then staged an impressive rally late in 2003 as the US economy surged. Demand for copper has a strong correlation with US economic growth and with the US building industry. Copper prices were also boosted by the weakness in the dollar. Copper prices closed 2003 at a 6-1/2 year high of .04 per pound. That is, however, still well below the 13-year high on the copper nearest-futures chart of .46 posted in July 1995 and the record high of .65 posted in December 1988.

Supply – World production of copper in 2001, the latest reporting year, rose by 3.8% to 13.700 million metric tons from 13.200 million in 2000. The world’s largest producer of copper is Chile with 34.6% of world production, followed by the US with 9.8%, Indonesia with 7.7%, and Australia with 6.3%. US production of refined copper in 2003 was on track to fall to 1.3 million tons from 1.508 million in 2002.

Demand – US consumption of copper in 2001 fell to 2.620 million metric tons from 3.030 million in 2000. The primary consumer of copper in the US is wire rod mills with 74% of usage, followed by brass mills with 24% of usage.

Trade – US exports of copper in 2003 were set to rebound sharply higher from the depressed levels of 22,500 metric tons in 2001 and 26,600 metric tons in 2002. US imports of copper in 2003 were set to fall slightly from 927,000 metric tons in 2002.