COVID-19 Pandemic Impact on Copper Futures Prices

Abstract

The COVID-19 pandemic has halted the global economy, causing significant changes in the economic policies of various countries, which have had a significant impact on the relationship between supply and demand for various commodities. Under these circumstances, commodity prices have fluctuated significantly. This paper concentrates on the influence of the COVID-19 pandemic on copper prices to forecast the long-term movement of copper futures prices and provide investment conditions for transacting copper futures contracts. Comparing the timing of different monetary policy announcements in the United States with the trend of copper futures prices reveals a negative correlation between the copper futures prices and the Fed's rate. Moreover, copper storage is susceptible to logistical disruptions, and copper's financial properties have outweighed its industrial properties during monetary policy changes, resulting in a volatile downward trend in copper futures prices in the short term. Copper's industrial properties will be the primary contributor to stable monetary policy and economic expansion, resulting in a gradual upward trend in copper futures prices. In conclusion, hedging investors can profit from long copper futures when quantitative easing is announced, as future copper prices are anticipated to rise. Conversely, speculating investors can profit from long copper futures immediately after the contractionary monetary policy has been announced, as copper futures prices at that time are predicted to be at a trough and rebound shortly.