When stock market traders want to know how the global economy is doing, they often turn to Dr. Copper. Because Copper is attributed visionary qualities to interpret the course of the economy. However, the much-consulted fortune-teller is not about a person, but simply about the worldwide price of copper (copper means copper in English). If the price of the red metal gets into trouble, the economy is threatened with evil – and red stock prices.
The discussion about expensive oil and gas prices almost covered the copper freaks. In the meantime, however, the price for a ton of copper has fallen so sharply that traders can hardly close their eyes: while more than $10,000 per ton of copper was due at the beginning of April, the price is now 30 percent lower. And since copper is in everything from cars to cell phones to homes, that doesn’t bode well.
Around half of the world’s copper goes to China, which is currently facing growth concerns. It was only on Friday that Beijing had to call its banks to an emergency meeting because many large real estate developers are on the verge of bankruptcy, nothing is moving on the construction sites and, accordingly, less copper is needed.
A lot of copper is needed for solar systems, e-cars and wind turbines
In addition, there is Beijing’s zero-Covid strategy of quickly sealing off entire port cities in the event of individual infections. “A completely confused health policy,” complains Robert P. Ryan from the analysis house BCA Research. As if that weren’t enough, fears of a recession are also spreading in the USA. Europe, on the other hand, is trembling with hard times if no gas continues to flow through the Nord Stream 1 pipeline from Thursday.
The speculators on the commodity exchanges are therefore clearly betting that the copper price will continue to collapse. “However, you have to be careful not to get carried away by the general mood on the market,” says commodities expert Cyrus de la Rubia from Hamburg Commercial Bank. Because in addition to the state of the global economy, the details of the metal markets can also influence the copper price.
If copper prices fall, demand for the red metal could pick up again because it’s cheaper. Second argument for a trend reversal: Since copper prices are currently fluctuating particularly strongly, many producers remain rather cautious, hardly invest in additional mining projects and ensure a tight supply in the medium term. At the same time, more copper is needed for solar systems, e-cars and wind turbines due to the energy transition. So the visionary quality of the metal could soon be superimposed, the honorary doctorate for Dr. Copper on the stock market in question.