ECN500 Managerial Economics: Demand and Supply in the Copper Industry

This report, prepared by Nolan Ivan G. Eudin for International American University's ECN500 Managerial Economics course, analyzes the demand and supply dynamics within the copper industry. It examines the significant impact of China's burgeoning property sector on copper demand, highlighting how this has driven price increases and market reactions. The report explores the effects of global economic downturns, including the search for substitute materials like aluminum and the influence of US and EU economic data on copper prices. Furthermore, it delves into how sudden changes in unemployment claims and global events, such as the Chilean earthquake and labor strikes, impact copper supply and prices. The analysis includes graphical representations of supply and demand shifts, and concludes with a discussion of forecasted supply surpluses. The report also includes a section on in-text citations and referencing guidelines. Overall, the report provides a comprehensive overview of the factors affecting the copper market, from demand and supply to economic and global influences.

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Demand and Supply in the Copper Industry
Nolan Ivan G. Eudin
International American University
ECN500: Managerial Economics
Dr James Lott
November 1, 2020

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Demand and Supply in the Copper Industry
This is your introduction and thesis paragraph. The introduction should be about five or
● In China, the need for copper has skyrocketed as the country’s property sector boomed.
“The red metal is used for a wide range of applications in engineering and construction,
and is often viewed as a reliable indicator of global economic health.” (Tan, 2019).
The Demand of Copper in China
In 2011, the market demand for copper continued rising dramatically on the back of
remarkable growth in emerging market economies such as China. The prices for the red metal
has largely increased because of it’s seemingly insatiable demand in the Chinese market, even
reaching an all-time high at $4.62 per pound. As such, the market has quickly reacted to this
increase in copper price which has caused the demand to start to decrease. However, with the
discovery of unreported stockpiles of copper being held by China’s manufacturing sector
warehouses, it has put the country’s total stocks at 1.9 million tons (Farchy, 2011). Due to this,
the copper supply is expected to increase which could push the prices of copper down.

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Figure 1
Shift of Supply Curve
Note. The supply curve shifts to the right, assuming all else constant, the quantity supplied
increases. As such, the equilibrium price for copper decreases.
The Global Economic Downturn
Copper consumers had retaliated from the previous price hike of copper and began
seeking alternative substitute material. One of which was aluminium--cheaper and lighter than
copper--is benefiting most from substitution (Curtis, 2010). This has caused demand for copper
to decrease in housing and construction markets, as well as other important markets. The adverse
US economic data, concerns over EU economic conditions and Chinese inflation had worried
analysts due to the further decrease in prices of copper.

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Figure 2
Shifting of Demand Curve
Note. The demand curve shifts to the right, assuming all else constant, the quantity demanded
decreases. Therefore, the equilibrium price for copper also decreases.
Sudden Changes in Copper Price
A decline in new claims for unemployment benefits during the summer of 2011 led to the
increase in copper prices. It was considered that any changes in unemployment could impact
prices as copper is widely used in manufacturing and construction. Further, the metal’s extreme
volatility has become much evident in September 2011 when the European Union has been
speculated to expand its support of troubled banks in the union due to the financial crisis in the
region as well as when a report published by a Federal Reserve Bank of Chicago that shows an
increase in manufacturing output in the Midwest.

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Figure 3
Change of Quantity Demanded
Note. The quantity demanded changes and shifts to the right as the price increases based on
predictions.
Impacts on Copper Supply by Global Issues
Due to the massive earthquake in Chile in March 2010, analysts have become worrisome
about its impact on the country being the largest copper supplier in the world. As such, copper
prices have increased and reached a seven-week high following the calamity. Similarly, work
strikes in 2006 have limited copper production, further decreasing supply in spite of worldwide
demand and have caused the price of copper to remain at record highs that year. The high price
was stimulated by the economic growth in China as well as by the increased theft of copper coils
in home and business appliances in the United States.

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Figure 4
Decrease in Supply
Note. The quantity supplied decreases due to limited production of copper; As such, the supply
curve shifts to the left as price remains constant.
Forecasted Surplus in Supply of Copper
Surplus occurs when the quantity supplied is greater than the quantity demanded and the
price for the good is above equilibrium (Hutchinson, 2017). The slowing of the housing market
on the US economy and consumers settling on copper substitutes have caused demand for the
metal to decrease. Also, back in 2006, it was reported that the surplus for the first 11 months of
the year will be 108,000 metric tons; whilst another indicates an estimate of 40,000 for the whole
year. It was difficult to forecast future prices and production of copper due to different factors on
both the supply and demand sides of the market.

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Figure 5
Surplus on Copper Supply
Note. As demand for copper declines, the demand curve shifts to the left. It has left a surplus on
supply assuming that the price stays the same.

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PARAGRAPH 2
However, with the discovery of unreported stockpiles of copper being held by China’s
manufacturing sector warehouses, it has put the country’s total stocks at 1.9 million tons (Farchy,
2011). Due to this, the copper supply is expected to increase which could push the prices of
copper down.
pper
Let’s talk about in-text citation. Anytime you summarize what someone else has said, you
must always include the author’s last name and year either in the text narration (see next
paragraph) or in parentheses at the end. Most in-text citations should look something like this,
with the period after the parentheses (Ramirez, 2017). If you include any direct quotes from
someone else, include the author’s last name, year, and page number in parentheses at the end.
“Here is an example” (Ramirez, 2017, p. 26). If a work has three or more authors, the in-text
citation includes only the first author’s last name and then “et al,” like this: (Stein et al., 2019).

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If you would rather not have so many parentheses breaking up the flow of your text, you
can also work the in-text citation into what you are writing. For example, you can explain in your
narration how Pavlov et al. (2019, p. 5) are known for their research into classical conditioning
with animals, while Skinner & Ferster (1957) studied reinforcement of behavior in children.
The purpose of in-text citations is so your reader can find the correct source in your
References, so if you include any authors or titles in-text, they absolutely must match up with a
corresponding citation in your References. No “orphan” in-text citations! Find out more about
in-text citation on the UWW Library’s APA in-text citation page.
Business sources are not standard APA citations. See UWW Library’s APA business
sources citation page.
Discussion
The discussion should be the largest part of your paper and include your argument,
research, and experiences (for example, through Service-Learning). Each main point of your
paper should start its own paragraph with a strong first sentence. Again, limit the use of “I” and
“you” in academic writing.
Remember to introduce quotations with who said it and/or why it’s important. Make sure
quotes fit seamlessly in your paper. Include short quotations (40 words or less) in-text with
quotation marks. Use ellipsis (...) when omitting sections from a quote and use four periods (....)
(i.e., an ellipsis plus the period) if omitting the end section of a quote.
This is a longer quote, which is 40 or more words. Indent the quote a half-inch from the
left margin and double-space it with no quotation marks. To get the right format, just
click on “Quote” in the Styles area on the Word frame above. In parentheses, include the
author’s last name, year, and page number at the end, but no period (Smith, 2017, p. 45)

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If you include website sources, make sure they are trustworthy. Evaluate your sources
using the questions on this page. Check out our LibGuides by subject page – we have a guide for
your subject area, and many contain trustworthy free websites that you can use. Or search in
some of our introductory databases such as Academic Search Complete, CQ Researcher, ERIC
for education, Business Premium Collection for business, or other databases in which you can
easily search for popular sources such as newspapers and magazines.
Conclusion
The conclusion restates the thesis and summarizes the main arguments or points of the
article, so that your reader could just read the conclusion to generally understand the paper. What
is important to learn from reading your paper? If you know of areas in this topic that need further
study, mention them. After this paragraph, there is a page break that forces References onto its
own page: You will want to keep it there.

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References
[More References examples for your assistance here]
American Psychological Association. (year). Article title: Capital letter also for subtitle. Name of
Journal, volume#(issue#), pg#-pg#.
Author(s) of essay or chapter. (year). Title of essay or chapter. In F. M. Lastname (Ed.), Book
title (pages of essay or chapter). Publisher. https://doi.org/10.xx.xxxxxxxxxx
Freud, S. (year). Article title. Name of Journal, volume(issue), pages.
https://doi.org/10.xx.xxxxxxxxxx
Pavlov, I., Jung, C., & Freud, S. (year of last update, month day). Webpage title. Source or
hosting webpage. https://www.someurl.com/full/address
Ramirez, A. T. (year). Book title. Publisher. https://doi.org/10.xx.xxxxxxxxxx
Skinner, B. F., & Ferster, C. B. (year). Article title: Capital letter also for subtitle. Name of
Journal, volume#(issue#), pg#-pg#. https://doi.org/10.xx.xxxxxxxxxx
Stein, D. J., Friedman, M. J., & Blanco, C. (Eds.). (year). Book title (edition, Vol. #). Publisher.
https://doi.org/10.xx.xxxxxxxxxx