Strong demand in the face of looming supply shortages has pushed the price of copper to new heights in recent years.
With a wide range of applications in nearly every sector, copper is by far the most industrious of the base metals. For decades, the copper price has been a key indicator of global economic health, earning the red metal the moniker “Dr. Copper.” Rising prices signal a strong global economy, while a significant longer-term drop in the price of copper is often a symptom of economic instability.
After bottoming out at US$2.17 per pound in mid-March 2020, the copper price has been on a steep upward trajectory ever since.
Higher copper prices in 2021 have been attributed to a supply/demand gap that’s widening as many of the world’s largest economies begin to emerge from the coronavirus pandemic — the already tenuous copper supply picture was made worse by COVID-19 lockdowns. Copper-mining and refining activities haven’t been able to keep up with the rebound in economic activity.
In response, the copper price has reached record highs in 2021. But what was the highest price for copper? The Investing News Network (INN) will answer that question, but first let’s take a deeper look at what factors are driving the price of copper, as well as historical movements in the price of copper.
Highest price for copper: Copper price drivers
Robust copper demand has long been one of the strongest factors driving copper prices. The ever-growing number of copper uses in everyday life — from building construction and electrical grids to electronic products and home appliances — makes it the world’s third most-consumed metal.
Copper’s anti-corrosive and highly conductive properties are why it’s the go-to metal for the construction industry (for example, in copper pipes and copper wiring). In fact, construction is responsible for nearly half of global copper consumption. Rising demand for new homes and home renovations in both Asian and western economies is expected to support copper prices moving forward.
Additionally, copper’s conductive properties are increasingly being sought after for use in renewable energy applications, including thermal, hydro, wind and solar energy.
However, the biggest drivers of copper consumption in the renewable energy sector are rising global demand for electric vehicles (EVs), EV charging infrastructure and energy storage applications. As governments push forward with transportation network electrification and energy storage initiatives as a means to combat climate change, copper demand from this segment is expected to surge.
In recent decades, copper price spikes have been strongly tied to rising demand from China as the economic powerhouse injects government-backed funding into new housing and infrastructure. A strong rebound in industrial production and construction activity in the Asian nation is expected to buoy copper prices going forward. By 2022, consumption in China is to reach 13.65 million tons, according to Statista.
Europe is also becoming a hotbed for copper consumption as its renewable energy sector grows. In 2020, Europe led the world in EV sales, with a total of about 2 million units sold, and analysts expect that trend to continue in 2021. While internal combustion engine vehicles use approximately 22 kilograms of copper, hybrid EVs use 40 kilograms, plug-in hybrid EVs use 55 kilograms, battery EVs use 80 kilograms and battery electric buses use 253 kilograms.
Eleni Joannides, principal copper analyst with research firm Wood Mackenzie, told INN that the amount of copper Europe will require to meet forecast EV demand will depend on what type of EVs spark consumer interest.
On the supply side of the copper market, the world’s largest copper mines are facing depleting high-grade copper resources, while over the last decade or more new copper discoveries have become few and far between.
The coronavirus pandemic made the situation worse as mining activities in several top copper-producing countries faced work stoppages and copper companies delayed investments in further exploration and development — a challenging problem considering it can take as many as 10 to 20 years to move a project from discovery to production. In addition, delayed investments amid the pandemic will also have long-term repercussions for copper supply.
Leading up to 2024, S&P Global Market Intelligence commodity analyst Thomas Rutland has said his firm “forecast(s) that consumption will outstrip production … resulting in a growing refined market deficit and increasing copper prices.” S&P Global expects the deficit in the global refined copper market will grow from 5,000 tonnes in 2020 to more than 200,000 tonnes by 2024.
Furthermore, concern is growing over low warehouse inventories of copper. In late April 2021, commodity analysts at the Bank of America (NYSE:BAC) noted that copper inventories were at their lowest levels in 15 years, covering a mere 3.3 weeks of demand. Projecting copper market deficits in 2021 and 2022, the analysts warned that copper supply shortages may lead to further price spikes as the global economy continues to open up post-COVID.
This means end users may need to turn to the copper scrap market to make up for the supply shortage. Sometimes referred to as “the world’s largest copper mine,” recycled copper scrap contributes significantly to supplying and balancing the copper market.
Highest price for copper: Historical copper price action
Taking a look back at historical price action, the copper price has had a wild ride over the past 20 years.
Sitting at a low of US$0.73 in early June 2001, the copper price followed global economic growth up to a high of US$3.91 in April 2008. Of course, the global economic crisis of 2008 soon led to a copper crash that left the metal at US$1.29 by the end of year.
Once the global economy began to recover in 2011, copper prices posted a new record high of US$4.58 at start of the year. However, this high was short-lived as the copper price began a five year downward trend, bottoming out at around US$1.95 in early 2016.
Copper prices stayed fairly flat over the next four years, moving in a range of US$2.50 to US$3.
20 year copper price performance. Chart via Macrotrends.
In 2020, the coronavirus pandemic’s impact on mine supply and refined copper pushed prices higher despite the economic slowdown. The copper price climbed from a low of US$2.17 in March to close out the year at US$3.52.
In 2021, copper prices continued to spike on economic recovery expectations and supply shortages to reach their current all-time high. So what exactly was the highest price for copper?
Highest price for copper: 2021 a record year
Copper topped US$4.90 for the first time ever on May 10, 2021, before falling back to close at US$4.76.
How did it get there? The metal started out the year at US$3.55. Throughout the first quarter of 2021, signs of economic recovery and supercharged interest in EVs and renewable energy pushed the price of copper to rally higher and higher. First, the red metal broke through the US$4 level in mid-February to reach a 10 year high of US$4.30 on February 24. All told, the copper price gained more than 11 percent in Q1 2021, compared to the 20 percent decline suffered in the same quarter the previous year.
“Copper surged in early 2021 and outperformed consensus forecasts,” Dan Smith of Commodity Market Analytics told INN. “The main surprise was the strength of Organization for Economic Co-operation and Development manufacturing, with survey data pointing to rapid expansions in Europe and the US.”
Expectations for higher copper demand continued in Q2 amid supply concerns out of two of the world’s major copper producers: Chile and Peru. In late April, port workers in Chile called for a strike, while in Peru presidential candidate Pedro Castillo proposed nationalizing mining and redrafting the country’s constitution. The result was another 10 year high for copper, which rose as high as US$4.50 on April 28.
In early May, news broke that copper inventories were at their lowest point in 15 years. Analysts such as Bank of America commodity strategist Michael Widmer warned of further inventory declines this year and into 2022 leading to a copper market deficit.
Soon after, the copper price hit its current all-time high on May 10 before closing at US$4.72. Since then, copper prices have traded a tad lower into June, but have managed to hold above US$4.50 as of June 7.
We asked our Twitter followers if they think copper’s high price levels are sustainable. Nearly 75 percent of respondents replied, “Yes!”
Copper’s rally in 2021 has encouraged bullish sentiment on even stronger copper prices ahead. Adam Rozencwajg of Goehring & Rozencwajg told INN that copper could rise as high as US$15. “I think that there’s a very, very strong bull market ahead,” he said.
Watch the full conversation with Rozencwajg.
Highest price for copper: Investor takeaway
Copper market fundamentals suggest continued strength going forward. The copper supply/demand imbalance also presents an investment opportunity for those interested in copper-mining stocks.
Byron King, who writes the Whiskey & Gunpowder newsletter at St. Paul Research, which is part of Agora Financial, told INN that major copper miners are looking very attractive in this market. “If you want to make money off of the current copper price … then you need to be in the really big companies,” he said. King likes Freeport-McMoRan (NYSE:FCX), BHP (ASX:BHP,NYSE:BHP,LSE:BHP), Glencore (LSE:GLEN) and Rio Tinto (ASX:RIO,NYSE:RIO,LSE:RIO).
Watch the full conversation with King.
King believes junior copper exploration companies with strong projects are also worth investor attention, and within this market they may be of interest to major copper miners as well. “(These dynamics) are the recipe for higher prices for copper, they’re the recipe for really promising junior-type exploration or early stage development companies to do very well,” he said. “They’re a recipe for mergers and takeovers in the big copper and intermediate-size copper (companies).”
Are there any copper companies are your radar? Let us know in the comments below. If you’re looking for some inspiration, head on over to our articles on the best copper stocks on the TSX and TSXV.
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Securities Disclosure: I, Melissa Pistilli, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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