Copper, the flagship industrial metal, is used throughout the building of infrastructure and construction. Copper is consumed extensively in the conduction of electricity, plumbing and piping as well as commercial construction. Demand from the emerging markets, especially China - who are experiencing the largest mass migration from rural areas into cities the world has ever seen - has put strain on global copper supply. The construction and infrastructure requirements are at the very foundations of the urban expansion strategy that the Chinese and other BRIC economies are undertaking.
Copper supply, like many of the world’s most valued resources, ostensibly comes from countries with poor political stability. Chile, Peru and China are among the nations with the largest copper resources and have been subject to a plethora of problems. Any geopolitical problems within these countries are likely to create spikes in copper prices. Other non-political risks, such as natural disasters can have a similar impact on prices and are commonplace in these regions.
With copper seen by many as a barometer for global economic growth, we often see copper moving in correlation with the equity markets as well as other industrial metals.