Trade: copper market

In the chain of the copper industry, mining companies such as Codelco extract the ore from the deposits and process it to obtain a metal of high purity that is sold to its main clients, the fabricators of semimanufactured products, which in turn will transform it to then offer it to the end consumers.

Copper mining companies and their clients sustain a market of some 30,000 million dollars a year.

Copper producers and their clients carry out the transactions of the red metal in three international markets: theLondon Metal Exchange, the COMEX of the New York Stock Exchange and the Shangai Metal Exchange.

In these three arenas, producers and consumers have all the facilities to perform their sale and buying operations. Also, they participate in a mechanism that expedites the fixing of prices based on the offer and the demand.

The exchanges set a daily price and also quotations for the future transactions, which offers an interesting scenario to negotiate contracts and buying options on copper lots.

In London, copper is traded in dollars and in lots of 25 tons; in New York, trades are made on the basis of 25,000 lbs quoted in dollar cents; in Shangai, in lots of 5 tons quoted in renminbi.

The price of copper depends on the conditions of the international market and it tends to go up as demand increases.

One of the major challenges for copper producers is the development and defense of the markets. In the case of Codelco, this is a strategic aim that implies the detection of new deman nucleii and the promotion of copper as a modern material with attractive properties for the consumer of the future.

The threats to copper in the international markets derive from the use of alternative materials, such as plastic, and from technological adavances in miniaturization and wireless communications, as well as from health and environmental regulatory pressures.

However, copper has the potential to overcome these obstacles, since its use is essential for the evolution of the industrial society and technological development. New applications for this prehistoric material can be already foreseen in the future.

Concerning health and environment, producers are working towards a sustainable mining industry through the application of increasingly clean processes, improvement of the relationship with the community and the promotion of copper qualities: it is highly recyclabe and energy efficient.

Also, copper is essential to life. All humans must intake copper through our food. And although an excess may cause problems, the risk of deficiency is greater than that of excess.

"Copper connects life" is the motto of the INternational Copper Association, the main organization of producers.

As to the opening of new market opportunities, the main interest is to explore focii of new demand associated to developing economies undergoing expansion, such as China and India.

Other countries are also expected to increase their demand for copper as they raise their levels of economic and social development. The per capita consumption of a developed country, between 10 and 20 Kg a year, is ten times that of developing countries.

Will copper be necessary in the future? The answer to this is that it will be irreplaceable, particularly in view of the trends of a civilization that moves towards greater energy consumption, increased use of information and communication technologies, greater need of comfort and safety and an increasing concern for the environment and human health.