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 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 in 2010 posted a 1-1/2 year high of $3.68 per pound in April 2010 but then plunged to a 1-1/2 year low of $2.72 per pound in June 2010. Copper prices then began a rally in June 2010 that continued into the end of the year with prices soaring to a record high of $4.44 per pound in December 2010 and closing 2010 up 33% at $4.395 per pound. Copper prices advanced further and in February 2011 posted yet another record high of $4.6495 per pound. Strength in the global economy was the main bullish factor for copper prices along with limited supplies with ICSG data showing the global copper market in deficit throughout 2010.

Supply – World production of copper in 2010 rose by +1.9% yr/yr to 16.200 million metric tons, which was a new record high. The largest producer of copper was Chile with 34.1% of the world’s production, followed by the Peru with 7.9%, China with 7.1%, the US with 6.9%, and Australia with 5.6%. U.S. production of refined copper in 2010 fell -4.8% yr/yr to 1.104 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 2008 (latest data available) fell 5.6% yr/yr to 2.020 million metric tons. The primary users of copper in the U.S. in 2008 by class of consumer were wire rod mills with 73.8% of usage, brass mills with 23.7% of usage, and nominal use of 1.2% or less by each of foundries, ingot makers, and chemical plants.

Trade – U.S. exports of refined copper in 2010 rose by +15.0% to 92,960 metric tons, above the 2008 6-year low of 36,500 metric tons. U.S. imports of copper in 2010 fell by 7.2% yr/yr to 615,733 metric tons.

Excerpted from the CRB Commodity Yearbook. For more information on CRB products click here