Widely Used Copper is Used as an Indicator

The prices of industrial metals rose in 2010 with copper in particular hitting an all-time high of $9,687 for a tonne on the London Metal Exchange at the end of the year. It has risen in value by 30% during 2010 and half of that rise was seen in December alone.

The price of copper has been driven up by the global economic recovery and also because of low stockpiles around the globe. Industrial output by emerging markets has caused a demand for copper and other industrial metals, outstripping supply. Manufacturing in the more established countries of Europe and the US has also picked up. Also investors have sought commodities to hedge against inflation and currency debasement.

With stockpiles around the world down by about a third from the previous year, except in China which built up stock in 2009, traders are saying that there is a risk that prices will be forced even higher if the present recovery gathers pace.

Copper is often used as an indicator of the health of the world economy and leads the way for other industrial metals. It is used in electrical goods and construction, sure indicators of the economy. The International Copper Study Group is forecasting a 435,000 ton shortfall of refined copper for 2011.

Copper is used extensively wherever electricity is used, be it inside electrical goods or in the copper wires and pipes in houses, offices and any such buildings. Copper is used as it is the second most conductive metal after silver for electricity.

Other industrial metals have done well in 2010, Nickel is up by 25% and tin is up by 55%. Precious metals have also risen in price over fears of poor monetary policies in Europe and the US. Palladium roses by 94% over the year. Gold has increased by 29.7% and silver is up over 83% in the same period.