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Key Economic Indicators Copper Investors Should Track

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Key economic indicators

On June 15, copper prices were trading at $5,761 per metric ton on the spot market, losing ~$600 per ton in just one month. Copper started the year on a weak note and declined by ~15% in January alone. Prices recovered smartly thereafter, however, hitting $6,448 per ton on May 12. That’s the highest price the red metal has garnered since December 2014.

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What do we cover in this series?

Copper prices have been especially volatile this year, with weak Chinese data weighing heavily on market sentiment. In this series, we’ll analyze some of the economic indicators that investors in copper plays should track.

We’ll look at the recent economic data and how they impact copper producers like Freeport McMoRan (FCX). Freeport, Rio Tinto (RIO), and Southern Copper (SCCO) are among the leading copper producers.

Freeport McMoRan has lost more than one-sixth of its market capitalization this year, as you can see in the chart above. It currently forms 1.16% of the iShares North American Natural Resources ETF (IGE) and 4.06% of the SPDR S&P Metals and Mining ETF (XME).

Chinese demand indicators

We’ll analyze how copper production and demand are shaping up in China, the world’s biggest copper consumer. Chinese demand has been the key driver of the global copper industry for several years now.

Copper prices directly impact the revenues and profits of copper producers. In the next part, we’ll analyze the recent trends in copper prices.

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