The word copper comes from name of the Mediterranean island Cyprus that was a primary source of the metal. Dating back more than 10,000 years, copper is the oldest metal used by humans. From the Pyramid of Cheops in Egypt, archeologists recovered a portion of a water plumbing system whose copper tubing was found in serviceable condition after more than 5,000 years.
Copper is one of the most widely used industrial metals because it is an excellent conductor of electricity, has strong corrosion-resistance properties, and is very ductile. It is also used to produce the alloys of brass (a copper-zinc alloy) and bronze (a copper-tin alloy), both of which are far harder and stronger than pure copper. Electrical uses of copper account for about 75% of total copper usage, and building construction is the single largest market (the average U.S. home contains 400 pounds of copper). Copper is biostatic, meaning that bacteria will not grow on its surface, and it is therefore used in air-conditioning systems, food processing surfaces, and doorknobs to prevent the spread of disease.
Copper futures and options are traded on the London Metal Exchange (LME) and the COMEX Division of the New York Mercantile Exchange (Nymex). Copper futures are traded on the Shanghai Futures Exchange. The Nymex copper futures contract calls for the delivery of 25,000 pounds of Grade 1 electrolyte copper and is priced in terms of cents per pound.
Prices - Nymex copper futures prices moved lower early in 2007 but then rallied during the remainder of the year to close 2007 up +6.2% y/y at $3.03 per pound. Strong Chinese demand kept a floor under copper prices and offset lower demand from the weak U.S. housing and auto sectors, which are heavy copper users. The International Copper Study Group (ICSG) forecasted a 5.1% rise in copper production in 2007 to 15.79 million tons, producing a net copper surplus of 110,000 million metric tons in 2007 and the ICSG forecasts a 250,000 million metric ton surplus for 2008.
Supply - World production of copper in 2005 (the latest data available) rose by +2.7% yr/yr to 15.100 million metric tons, which was a new record high. U.S. production of refined copper in 2007 (annualized through March fell -0.1% yr/yr to 1.248 million short tons, which was far below the record U.S. production level of 2.490 million short tons seen in 1998.
Demand - U.S. consumption of copper in 2005 (latest available data) fell 5.8% yr/yr to 2.270 million metric tons. The primary users of copper in the U.S. in 2005 by class of consumer are wire rod mills with 74% of usage, brass mills with 23% of usage, and nominal use of 1% or less by foundries, ingot makers, and chemical plants.
Trade - U.S. exports of refined copper in 2007 (annualized from only January data) fell sharply by 65% to a 5-year low of 37.440 metric tons. U.S. imports of copper in 2007 (annualized from only January data) fell by 4.7% yr/yr to 1.048 million metric tons.