Market Overview: Copper (HG)

The United States, Chile, Peru, South Africa, Zaire and Zambia are the largest producer of copper while the United States and Japan are the largest consumers of copper. High-grade copper is an excellent conductor of heat and electricity making it an important industrial metal. Copper is used in electric and electronic equipment, building construction and engine production.

Seasonal Overview

Copper is a good leading indicator for the economy as demand will increase and decrease as housing starts and automobile inventories fluctuate. During strong economic periods there is an increased demand for new homes and cars, which in turn increases the demand for high grade copper. As the economic cycle turns down expect copper prices to quickly follow as inventories are cut back.

Copper: (High: Mar-Apr/Low: Jun or Dec) Classic case of "demand precedes consumption." The latter is typically greatest during US construction season May-Sep whereas the former is greatest as inventories are built in anticipation. Rally from First Notice Day (FND) for July contract into early September reflects "last-gasp" demand ahead of final burst of construction/remodeling before bad weather begins.

Chart courtesy of Moore Research Center, Inc.