In 2017, copper had one of its best years gaining by more than 25%. The bullish momentum was mostly because of the global growth, a strike in Chile, and the perceived demand increase as more people move to electrical vehicles. This year, the metal – often known as Dr. Copper – has had a rough period. Since June, it has dropped by more than 20%, bringing fears that the world’s economy was not heading in the right direction. Copper is often used as an indicator of the health of the global economy because of its uses. It is used in electrical work, plumbing, and in other complex engineering products.
The sudden decline in the price of copper was attributed to the perceived decline in world economy as big economies get involved in a trade war. It was also attributed to increase in production and strong dollar.
There is a likelihood that the price of copper may start moving high. First, the impacts of the trade war are mostly exaggerated. Second, there could be a disruption in the production of copper as workers in Escondido, Chile go to strike. Most importantly, weather professionals believe that El-Nino will affect top copper producers like Indonesia, Chile, and Australia. Historical data show that copper prices tend to rise by as much as 10% during the El Nino.
Copper prices have reached at $2.64 per pound. This is higher than the YTD low of $2.55 reached a week ago. As the NAFTA talks, EU-US trade deal, and US-China trade talks continue and uncertainty increases in Chile and Australia, the trend we are seeing may continue.
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