The recent rise and fall in copper prices : an econometric analysis

This thesis examines the determinant factors behind the recent rise and fall of copper prices. Furthermore, the thesis aims at investigating if the strong economic growth in China has been important for the copper price development. This is done using an econometric approach supported by economic theory, based on yearly data stretching from 1990 to 2008. A regression analysis was performed on the variables: China’s GDP, rest of the world GDP, copper usage as well as a time variable. The results indicate that China’s GDP is not significant in determining copper prices. However, a reason for this may be because China’s strong GDP growth was not seen until after 2001, hence it cannot be explained whether or not it is a determinant factor when using yearly data from 1990 (to 2008). The results further show that rest of the world GDP was the most important factor. Copper prices are highly affected by changes in the world economy, thus sensitive to business cycles.Validerat; 20101217 (root