What’s Up with Copper?

Recently, copper prices soared to record highs stoked by investors hedging on a U.S.-led global economic rebound. At the risk of instantly dating this blog post, copper prices have passed the $4.75/lb mark (as of May 11th). For context, the previous peak for copper was back in 2011 when the red metal rose to $4.63/lb. For further context, prices hovered around the $2.50/lb mark in early February 2020 (at the beginning of the COVID-19 pandemic).

So, what’s driving such a substantial price increase these days?

There are a few factors driving the global increase in the cost of copper, and they all relate to that old Economics 101 principle of supply and demand. When the available supply for something is low, and the demand rises, the “double whammy” that this situation creates, drives up prices and throws the equilibrium out of whack.

And folks, that’s what’s happening in the metals market today!


A drop in supply.

COVID-19 played a significant role in lowering supplies of industrial metals like copper and aluminum. The pandemic played a large factor in business disruptions that affected South American mining activity. With the uncertainty of the virus and an eye toward the safety of miners, activity was drastically reduced at mining operations in Chile – by far, the planet’s top copper producer. The Escondida and Spence copper mines account for almost 20% of the annual copper output in Chile. Ongoing labor struggles between these mines and unionized workers have further contributed to decreases in production. In addition, difficulties shipping copper materials around the world have also contributed to supply deficits.

In addition to mining, another factor that is impacting the supply side of the equation is a decrease in the flow of scrap supplies. Scrap copper accounts for about a third of the roughly 30 million tonnes of annual global copper supply. As copper prices rise, smelting activity typically accelerates as the scrap market attempts to cover the gap between demand and supply. With construction and demolition activity down, less scrap copper is finding its way into the market. There is also an element of scrappers holding on to supplies in an effort to time the market and maximize profits gained from rising commodities prices.

A boost in demand.

With the light at the end of the tunnel shining brighter in respect to the pandemic, pent-up demand for metals used in manufacturing and construction has surfaced. As COVID restrictions are lifted, manufacturing facilities are calling workers back and ramping up production in an attempt to make up for the lost time. Copper is a big factor in supporting this increased production and industrial purchasing agents tasked with fueling these production increases are competing for raw materials.

Commodities investors are also betting on global infrastructure spending and increased activity on the construction front to further strengthen demand. Adding to the investor excitement, analysts expect copper to be consumed in huge quantities as more governments seek to wean the power and transportation sectors off fossil fuels. These green energy initiatives will certainly call for copper materials and components, creating a further drain on industrial metal supplies. Further electrification on a global scale will continue to boost demand. Analysts expect further gains over the next five years given the rising demand for copper in electric-car infrastructure and other new uses of the metal.


Here at DWC, our purchasing team is out in front of this issue. Over the years, we’ve cultivated great relationships with manufacturers and supply chain entities that allow us to pass along maximum value to our customers. If you have a question or need a quote on copper or aluminum wire & cable, DWC Account Managers are here for you!