Learn About Futures Insider for November 17, 2011: Copper (Part 2)

[learnfuturesfk]

Part 1: http://www.italkcash.com/forum/commodities/307731-learn-about-futures-insider-november-17-2011-copper-part-1-a.html#post419310

Open pit mines are the main source of primary copper and once the ore has been extracted, smelting and refining can begin.



***Image courtesy of ICSG

***Image courtesy of ICSG



Price highlights for this market include:

* In 1936, the Pittsburgh Press reported that armament makers feared copper shortages amid growing industrial demand. At that time prices were round 11 cents a pound.
* Climbing prices in 1965 led to the planned release of nearly 200,000 tons from copper stockpiles and suspension of import duties. Prices had risen amid concern of a world shortage of copper. Speculative market prices were close to 70 cents a pound at that time.
* By 1970 one of the leading copper producers in the US was holding their prices around 59 cents per pound.
* In 1973 strong world demand for copper brought prices higher, with most producers in the US and Canada bringing prices up to 67 cents per pound. By 1974 firms were raising prices to 82 cents or more per pound.
* Through 1974 and into 1975 prices saw a steep decline amid overproduction, dropping back towards 59 cents per pound. Pressure came specifically from Japan when they began earnest exports of their copper surplus. In an effort to reproduce what OPEC did for oil, some of the world's top copper producers (including Chile, Zambia, and Peru) had called for output limits to help push prices higher.
* Copper prices climbed back towards $1.00 per pound towards the end of the decade, helped along by inflation and general interest in metals investment. By 1980, prices were reaching fresh records above $1.40 per pound boosted by mine worker strikes in Peru.
* Recession in 1982 weighed on copper demand and depressed prices. Some mining in Arizona was halted when prices reached 74 cents a pound since production costs were closer to 80 cents - $1.25 per pound.
* Prices remained low until 1988 when strikes in Peru, tight supplies, and stronger copper demand pushed prices back towards $1.40 per pound. In December of that year, news releases showed that 5,254 tons of copper were in licensed Comex warehouses while 6,621 contracts were still outstanding. This bumped prices up to fresh records at more than $1.60 per pound.
* Increasing supplies through the next few years kept nearly steady pressure on prices, finally seeing them dip below $1 per pound in 1993. Weak demand and sales from China contributed. The following year, prices rebounded on strong demand fueled by home builders.
* The next big move above $1.50 came in 2005 on the heels of rumors of a large short position in copper - nearly 200,000 tons.
* Copper prices continued to set fresh highs over the next few years, carried over $3, $3.50, and $4 per pound as soaring homebuilding, climbing Chinese demand, and various Chilean and Mexican mine strikes supported gains.
* Prices retreated sharply in 2008 as the credit crisis and housing collapse began to unfold. Prices would touch below $1.50 per pound before the end of the decade.
* Increasing commodity prices coupled with a weakened US dollar helped copper prices regain traction and head higher through 2010, 2011 eventually reaching a new high of more than $4.60 per pound.


Disclaimer: There is a substantial risk of loss in futures trading and it is not suitable for all investors. Losses can exceed your account size and/or margin requirements. Commodities trading can be extremely risky and is not for everyone. Some trading strategies have unlimited risk. Educate yourself on the risks and rewards of such investing prior to trading. Futures Press Inc., the publisher, and/or its affiliates, staff or anyone associated with Futures Press, Inc. or www.learnaboutfutures.com, do not guarantee profits or pre-determined loss points, and are not held monetarily responsible for the trading losses of others (subscribers or otherwise). Past results are by no means indicative of potential future returns. Fundamental factors, seasonal and weather trends, and current events may have already been factored into the markets. Information provided is compiled by sources believed to be reliable. Futures Press, Inc., and/or its principals, assume no responsibility for any errors or omissions as the information may not be complete or events may have been canceled or rescheduled. Any copy, reprint, broadcast or distribution of this report of any kind is prohibited without the expressed written consent of Futures Press, Inc.