Jefferies analyst Chris LaFemina created an index based on "the price of one ton of copper divided by hourly wages," with 1960 equaling 100. The current index is significantly higher than the approximately 108 of the 1970s and also higher than the 2020-26 average of approximately 95. Therefore, according to this indicator, copper is at its most expensive relative to labor income in the past 65 years.
The fundamental trend of "copper becoming increasingly scarce" is supported. The IEA's latest forecast indicates that, based on currently announced projects, copper supply may still be about 25% lower than demand in 2035. S&P Global points out that new copper mines take an average of about 17 years from discovery to production, while also facing constraints such as declining ore grades and rising energy and labor costs.
The current spot market is also tight: in early August, LME spot copper once hit a record high of $14,453.6 per ton, and inventories have decreased from 401,000 tons in early May to approximately 215,000 tons.
The "Hours Index" is essentially a real price indicator of copper relative to wages, and it is affected by copper price cycles, wage growth, and macroeconomic inflation. Jefferies currently predicts that copper prices may rise to $8 per pound, or approximately $17,600 per ton, by 2031-32.
