Copper Prices On The Rise

Chart of the Week for July 29-August 4, 2005

Commodity prices can be a used as an indicator of business activity. Copper is particularly a useful indicator because its use in the economy is so widespread. The chart illustrates the recent divergence of copper prices compared to the larger CRB Metal Index. Copper prices continue to rise and are hovering near multi-decade highs, indicating a continued strong demand. The marked increase in copper can in part be attributed to the surge in residential and commercial construction, where copper is commonly used in building materials. It is also difficult to increase supply of copper through new production, as copper resources are geographically dispersed. Although copper prices have continued to rise, prices for other industrial metals have declined as the result of increased supplies. While copper prices continue to remain elevated, analysts predict some slowdown towards year end.

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