A Deeper Dig: How The Housing Market Affects Arizona's Copper Industry
Seventy percent of U.S. copper is mined in Arizona, supplying raw material for electrical wiring and metal piping for homebuilders nationwide and automobile manufacturers and infrastructure development around the world. The price of copper took a deep dive in 2008 and recovered. But it's fallen steadily since 2011.
A leveling out of exports to China is one explanation for the slowing demand for copper and its lower price. And according to Economics Professor Dennis Hoffman of the W.P. Carey School of Business at Arizona State University, the slow recovery in the U.S. housing market is another.
“So, when the U.S. real estate market and construction market was on fire and it was certainly in Arizona, but it was to a large degree across many economies in the United States, say from 2004 through 2006, that dramatically ratcheted up the demand for copper," Hoffman said. "And, then again, that fell off, and was followed almost immediately by another major global player, China, ratcheting up their demand for copper. And those two effects, in my opinion, explain a lot of the variance over the last ten years in copper prices."
While the current price of copper, in the $2 per pound range, is nowhere near the all time low for one of Arizona’s signature industries, it is a 50 percent drop from the $3-$4 per pound price during the housing boom.