The 8% fall in copper prices this month puts the metal price on a path eerily similar to that of the oil price

John Robertson


The 8% fall in copper prices this month puts the metal price on a path eerily similar to that of the oil price. Both commodities have experienced unprecedented price rises of a similar order of magnitude through the most recent cycle. There is little history of trading outside this timeframe to gauge how prices might behave once they began to fall. Ultimately, the only guidepost to how low prices might fall is the possibility of production being cut at some lower level. Since well before 2008, copper prices have been above what had been needed to keep production intact. The Chilean Copper Commission has estimated that average copper cathode production costs globally in 2012, for example, were US$2.15 per pound. The most expensive production - at $2.66 per pound - was in Africa. Today's copper price remains sufficiently high to sustain virtually all the existing production.

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John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...


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