How Speculators Are Crippling the Copper Industry

Volatility in copper prices – and commodity prices more generally – is a product of financial speculation. Expansion of internet market trading, ravenous Chinese demand, and large financial firms looking to diversify portfolios contribute to demand. Copper is an essential component for cables, plumbing and electronic devices, and the limited nature of natural resources like copper piques the financial community's interest. Intense speculation disconnects prices from value, no longer adequately reflecting supply or demand. Market movements in New York and London complicate copper producers’ ability to make long-term investments around the globe and force manufacturers to devise elaborate hedging strategies to ensure relatively stable prices. Efforts to improve transparency and limit trading have hit a snag in the United States over worries of losing business to exchanges overseas. Coordinated worldwide effort is needed for copper markets to stabilize. – YaleGlobal