Copper prices have declined more than 20 per cent since June last year, according to Neil Hume, who noted in Financial Tines dated October 5^th, 2019.

Cooper has long been seen as a health check for the global economy because of its wide range of industrial uses. As a result of its excellent electrical conductivity, copper’s most common use is in electrical equipment such as wiring and motors. As it corrodes slowly, copper is used in roofing, guttering, and as rainspouts on building. It is also used in plumbing and cookware.

Neil Hume noted that copper was trading close to a two-year low of US$5,625 per tonne in early October 2019. Rates published so far last month have pointed to deterioration in global manufacturing activity as the US-China trade war continues.

Copper, which is used in almost all constriction projects and white goods, can offer powerful indication unmatched by other commodities and raw materials. That also makes selling the metal as a default mechanism for investors who have bearish views on growth and China, the biggest consumer of copper. Citigroup analysts have estimated that copper demand would grow only 0.2 per cent in 2019 because of lower grid spending and in car sales. Since the US started the trade dispute with China in June last year, the price of copper has fallen more than 20 per cent.  According to data from www.mcarotrends.net , the yearly closing prices of copper from 2010 to 2019 are as follows.

Year	Average closing prices (US per tonne)
2019	6,005
2018	6,466
2017	6,201
2016	4,852
2015	5,449
2014	6,847
2013	7,360
2012	7,959
2011	8,827
2010	7,575

“Copper has endured the most frustrating 2019 out of all the base metals,” noted Deutsche Bank analyst Nick Snowdon. This year’s near 2 per cent fall in global mine supply would usually have led to higher prices, Mr Snowdon said. But a combination of “sluggish demand” outside China and a significant reduction in the country’s inventory “has limited tightening effect for most of the year”, he said.

Neil Hume noted that analysts and investors are bullish on copper in the long term, arguing that it will play a role in the shift to a low-carbon economy. It is noted that a wind turbine capable of generating a megawatt of power, which is enough to supply 500 homes, requites more than three tonnes of copper. The metal is also needed in the lithium-ion batteries that power electric vehicles, as well as their motors, inverters and charging parts.  At the same time, it is difficult for mining companies to find long, high-grade copper projects.  According to the USGS Mineral Commodity Summaries 2017, the major producers of copper are:

Country	Production (Tonnes)
Australia	920,000
Canada	620,000
Chile	5,330,000
China	1,860,000
Congo	850,000
Indonesia	650,000
Mexico	755,000
Peru	2,390,000
US	1,270,000
Zambia	755,000
Other countries	4,300,000
	19,700,000

It is for that reason that analysts forecast a significant gap to open up between supply and demand by the middle of the next decade unless new projects come on stream.

Investors beware

A few years ago, during the height of copper prices, we were approached by a company to invest by purchasing copper recovered from construction wastes collected in Middle East. We were guaranteed high returns. Now, a friend and the company are embroiled in a court to recover the investment of US$50,000. Copper prices move up and down with the state of the world economy. The friend was convinced by the company that China, the biggest user of copper, would continue to grow at a pace.

We note that high copper prices will lead to disruption of communication lines when thieves steal copper cables. We would experience sudden loss of telecommunication services. Ten year ago, our remote factory experienced regular stoppages of service because thieves have stolen copper cables, every time the copper price spiked.