The price of copper is largely influenced by the health of the global economy. This is due to its widespread applications in all sectors of the economy, such as power generation and transmission, construction, factory equipment and electronics. Sometimes referred to as Doctor Copper, the base metal is seen as a reliable leading indicator. A rising market price suggests strong economic health, while a decline suggests the opposite.

For example, three-month copper futures traded at $4,731 per metric ton on the London Metal Exchange in March 2020. This was down significantly from $6,340 at the start of the year. The steep drop was attributed to macroeconomic factors and concerns stemming from the coronavirus pandemic. By May 2020, the price of copper had recovered to more than $5,200 per metric ton.

Key Takeaways

  • Humans have used copper for more than 10,000 years. Earliest applications included coins and ornaments.
  • Today, copper is used in power generation and transmission, construction, factory equipment and electronics.
  • Widespread usage means copper prices respond to expectations for the global economy.
  • Chile, Australia, Peru, Mexico and the U.S. have the largest copper deposits.

Copper Uses

Archaeological evidence suggests that copper was one of the first metals used by humans as early as 10,000 years ago. In western Asia, humans used copper to make coins and ornaments. Copper when alloyed with tin produces bronze, and this discovery led humans from the Stone Age into the Bronze Age around 2500 B.C.

Copper is just as important today. Copper is the best non-precious metal conductor of electricity. It is used in power cables, generators, motors and transformers. Copper is also used extensively in the manufacture of electronics and electrical components. In homes and buildings, copper has decorative as well as practical uses in pipes and wiring. Other uses include industrial machinery, vehicles and coins.

The largest copper deposits can be found in Chile, Australia, Peru, Mexico and the United States. Together, these five countries sit on roughly 65% of the world's copper deposits. To date, roughly 700 million metric tons of copper have been mined in the world. An estimated 2.1 billion tons of identified deposits remain in the ground, while undiscovered deposits are estimated at 3.5 billion tons.

The top producing copper countries are:

2019 Copper Production
Country Production Share
Chile 5.6 million metric tons 28%
Peru 2.4 million metric tons 12%
China 1.6 million metric tons 8%
United States 1.3 million metric tons 6.5%
Congo 1.3 million metric tons 6.5%
Australia 960,000 metric tons 4.8%
Mexico 770,000 metric tons 3.85%
Rest of World 6.07 million metric tons 30.35%
Total 20 million metric tons 100%

Source: U.S. Geological Survey.

Global Copper Consumption

Copper moves around the world in a variety of forms such as copper ore, raw copper, refined copper and copper wire. Chile and Peru are the largest exporters of copper ore, while China and Japan are its largest buyers. Zambia is the largest exporter of raw copper, while Switzerland is its largest buyer. Germany does a brisk business exporting copper wire.

Copper trades on the London Metal Exchange and COMEX, which is now a division under the Chicago Mercantile Exchange. Prices for the most part reflect expectations for global economic growth. At the beginning of 2020, forecasters expected a supply deficit of about 53,000 metric tons. With the global economic slowdown as a result of the coronavirus pandemic, that forecast was revised to a surplus of 200,000 to one million tons, thus illustrating the metal's importance as an economic bellwether. 

During periods of high prices—such as in 2011, when COMEX prices peaked at more than $4.50 per pound—users often turn to aluminium and other substitutes. Aluminium can replace copper in car radiators, cooling and refrigeration tubes, electrical equipment and power cables. Optical fiber replaces copper in telecommunications equipment, while plastic replaces copper in pipes and plumbing.

Recovered copper is also reintroduced into the global supply. In the U.S., post-consumer scrap contributed 160,000 tons of supply in 2019, or about 9% of consumption.