The price of copper continued its five-week decline this week, thanks in part to a cryptic message from China about releasing it’s stockpiled supply to meet demand and continued economic recovery around the world. But, analysts still believe the demand for copper, mainly in clean energy initiatives, will remain for most of this decade, meaning we may not see a return to prices at 2019 levels any time soon.
As of Friday morning, June 18, the price per pound of copper hovered around $4.25, after reaching a one-week low on Thursday at $4.20 a pound. That is more than 60 cents lower per pound that the record hit reached in mid-May.
Earlier this week, China announced that it would be releasing copper from its stockpile for the first time in 16 years, saying the price was becoming too high for end users to pay. The announcement did not include the amount of copper released, which could only lead to speculation that that amount will ease short-term supply needs, but will not create a long-term impact on copper markets.
Meanwhile, analysts are still seeing the demand for copper rise as supply problems and clean energy projects impact the market. Analysts now are forced to consider if the world’s two largest copper mines will be able to keep up with demand, especially since copper mine production has not increased over the past three years. Add on to that supply chain bottlenecks to move copper around to world to customers, and the analysts see prices remaining about $4 for a while. Plus, many green energy initiatives will last multiple years. Since they are reliant on copper, we can expect to see prices remain high.
For 2021, prices started the new year at $3.55 a pound and stayed in that range for a month before a significant spike in price in early February. The price jumped again in mid-April, before reaching a record high of $4.86 on the week of May 14.
Perhaps more startling is the price of copper compared to one year ago today. On June 18, 2020, copper was priced at $2.59 a pound. The additional $1.66 per pound being paid right now is a 64% increase in price over the past 365 days.
