While it wasn't a breakout year for copper, it's certainly been an interesting one. Here's an overview of some of 2014's key copper market events with commentary from Stefan Ioannou of Haywood Securities and copper company executives.
Despite kicking the year off with a rally, overall copper seems to have lived up to predictions for a lukewarm performance in 2014. The metal has averaged about $3.15 per pound for the year, according to Stefan Ioannou of Haywood Securities. "We weren't expecting 2014 to be a breakout year for copper," Ioannou said. Granted, $3.15 per pound is still a higher average price than some firms were predicting at the end of last year — Moody's saw copper coming in at $3 per pound. However, the metal has fallen back below $3 per pound leading up to the end of the year, which no doubt has some base metals investors feeling anxious. Still, 2014 was an exciting year for the red metal, as there were plenty of unexpected events that affected the market. Chinese shadow lending Perhaps the biggest news affecting copper this year was the Chinese shadow lending scandal. Basically, copper and other metals were being held in non-bonded warehouses in China as collateral for loans, but problems arose when some people indulged in the not-so-kosher practice of using the same block of physical copper as collateral for more than one loan. When China's government started to crack down on the practice, there were concerns that investigations would lead to an influx of copper into the market as traders attempted to cover their tracks. However, as Ioannou noted, that didn't happen, and "copper prices stayed fairly strong through the summer." Of course, with China accounting for over 40 percent of global copper demand, the shadow lending scandal was bound to top the list of big events for copper in 2014. However, Ioannou added that what may have caught people more off guard was the "massive market correction" seen across the board in September, which included copper. "A lot of that was driven off a strong US dollar," the analyst said.