Why Brexit Will Not Significantly Impact Copper Prices
The ‘leave’ outcome of the recently concluded EU referendum in Britain has had a destabilizing effect on global financial markets. However, the referendum itself and a British exit from the EU are unlikely to significantly impact copper prices. The dynamics of the copper market are largely determined by Chinese demand for the commodity, with China accounting for over 40% of the global demand for copper. [1] In comparison, the EU is a much smaller player in the global copper market, accounting for roughly 16% of the global demand for copper, as illustrated by the table shown below. The EU accounts for a similar share of global refined copper production.
Furthermore, as per estimates by Goldman Sachs economists, a worsening of the terms of trade between the EU and the UK post Brexit would negatively impact EU GDP by around 0.5%, with GDP growth estimates for the next two years cut to 1.25%. [2] Considering the the relatively muted economic impact of Brexit on countries that account for only around 12% of global refined copper production, the event is unlikely to materially impact the demand and supply dynamics of the copper market. Thus, Brexit is unlikely to significantly impact copper prices.
Have more questions about Freeport-McMoRan? See the links below.
- What Is Freeport-McMoRan’s Fundamental Value Based On 2015 Results?
- What Is Freeport-McMoRan’s Revenue And EBITDA Breakdown?
- How Has Freeport-McMoRan’s Revenue Composition Changed Over The Last 5 Years?
- By What Percentage Did Freeport-McMoRan’s Revenue & EBITDA Decline Over The Last 5 Years?
- By What Percentage Can Freeport-McMoRan’s Revenue & EBITDA Change Over The Next 3 Years?
- How Will Freeport-McMoRan’s Revenue Composition Change by 2020?
- Why Have Copper Prices Declined Over The Past Year?
- Why Is China Important For The Global Copper Industry ?
Notes:
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- How Is Freeport Stock Faring Amid Volatile Copper Prices?
- Copper Prices Have Recovered A Bit. Is Freeport Stock Worth A Look?
- Lower Copper Prices Will Weigh On Freeport’s Q3 Results
- What’s Happening With Freeport-McMoRan Stock?
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