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Copper Market Overview

Annual Report 2021

Copper Market Overview

Copper prices recovered in 2021 due to an anticipated uptick in demand.

In 2021, the price of copper was historically strong, with average annual prices marking an all-time high of $4.23/lb, a significant increase over the $2.80/lb annual average in 2020.

Early in the pandemic period, copper prices were negatively impacted by the global reduction in manufacturing and economic activity resulting from the spread of Covid-19, falling to a 4-year low of $1.98/lb in March 2020.

Subsequently, copper prices recovered strongly and steadily over the remainder of 2020 and into 2021, reaching an all-time high of $4.87/lb in August 2021 due to an anticipated uptick in demand from increased manufacturing activity and a rebound in economic growth, low levels of global copper stockpiles, and constrained mine supply.

Gold, Copper and S&P 500 Total Return Index Since 2000

Gold, Copper and S&P 500 Total Return Index Since 2000

As anticipated, China’s GDP growth rate recovered strongly in 2021, to an annual level of 8.1%. As China is by far the world’s largest consumer of copper, a return to a robust level of economic growth had a significant impact on copper demand, and the price of copper, during 2021.

In the longer run, the increase in the volume of copper that is used in the manufacture of electric vehicles versus those with combustion engines bodes well for copper demand, as electric vehicles are poised to comprise a growing share of all vehicles produced over the next decade. Combined with the copper that will be required to expand the electrical grids to support the anticipated growth in usage of electric vehicles, the outlook for copper demand in the coming years remains very strong.

Since the turn of the century, as the global economy has undergone a number of significant challenges, the market prices of both gold and copper have each increased significantly, with copper prices experiencing greater volatility and gold prices showing more consistent strength. Over this time period, gold and copper prices have both outpaced the gains of the S&P 500 Total Return Index, demonstrating the long-term benefits of holding hard assets in an investment portfolio.

Annual Report 2021

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