Tuesday, September 2, 2014

Copper Prices

Copper prices this year we initially falling due to expectations that Chinese demand for copper was decreasing.  Now with a rise in production costs, we see that copper prices are rising.

Each of these changes in prices is exactly what we would expect using supply and demand.  First as demand is expected to decrease the price will fall reflecting the future lower demand, or in economics the demand curve is shifting to the left.  Second, as production costs are rising the supply curve is shifting left resulting in a rise in the market price.  In both cases, we would expect a decline in the production.  This is also the case as the global surplus of copper is falling as  current production is falling.

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