ANALYSE FRA ABN OM SAMMENHÆNGEN MELLEM KOBBERPRISER OG UDVIKLINGEN I DEN GLOBALE ØKONOMI
Copper is a major component of the economy and plays a particularly important role in emerging countries. At a global level, China is a major player, accounting for a major share of both the consumption and production of copper. Copper is a vital part of our daily lives. Given the wide variety of its applications, it is often suggested that the trends in the copper market are a useful leading indicator of the state of the world economy. And in fact, the metal is sometimes referred to as “Doctor Copper”. This report sets out the relationship between the copper price and a wide range of economic variables. Which economic or other indicators have a strong correlation with copper, and what are the key drivers? Can the copper price be considered an indicator of the world economy? Our analysis shows, among other things, that the copper price has a strong correlation with numerous indicators that are relevant for tracking the world economy. So there is some truth in the contention that the copper price can help identify macro-economic trends. When demand for copper grows, the price will rise. And greater demand for copper means that industrial activity is rising, and hence that the economy is expanding. Even so, the correlation remains challenging: the copper price also reacts strongly to the release of new macro data, as stakeholders try to estimate future demand for copper, and this sentiment is reflected in its price. In any case, it is more relevant to track the long-term price trend (in relation to the economy and the fundamentals) than the short-term movements. Which industries are the heaviest users of copper? Copper is used across a wide range of sectors and industries. This explains why it is linked – more strongly than other base metals – directly with economic activity in those sectors and industries as well as indirectly with the overall economic activity. Within the manufacturing sectors, copper is widely used in machinery and is also turned into end products and semi-manufactures (such as roof tiles, door knobs, pipes, tubes etc.). The electrical engineering and electrical appliances industry accounts for a huge share of global copper consumption (in consumer products such as computers and domestic appliances). Because it acts as an effective conductor of heat and electricity, copper is also used in the installation sector, the energy sector and the ICT sector. And as a good conductor of heat, it is widely used in the transport equipment industry as well. Automobile production springs to mind here: a passenger car contains about 20-50 kilograms of copper, depending on the model. Smaller cars contain around one kilometre of copper wires and cables, while radiators are also fitted with a substantial amount of copper. The construction sector is another X
