Factors influencing the movement of copper price on London metal exchange
(This research is to understand the factors influencing the movement of copper price on LME in order to increase the competitiveness, reduce the risk, and improve the project management and reduce the losses from price volatilitv Three variables are (copper stock level, aluminium price, and excha...
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| Main Author: | |
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| Format: | Thesis |
| Language: | English |
| Published: |
Universiti Malaysia Sarawak, (UNIMAS)
2010
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| Subjects: | |
| Online Access: | http://ir.unimas.my/id/eprint/9037/1/Ngang%20Mee%20Foong%20ft.pdf http://ir.unimas.my/id/eprint/9037/ |
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| Summary: | (This research is to understand the factors influencing the movement of copper price
on LME in order to increase the competitiveness, reduce the risk, and improve the
project management and reduce the losses from price volatilitv
Three variables are (copper stock level, aluminium price, and exchange rate) being
identified as the possible factors influencing the movement of copper price on LME.
Theory of price formation of copper had determined the factors for the copper price
formation. However, as this study focuses on how stock level, aluminium price (price
of a substitute) and exchange rate influence the movement of copper LME price, it
will use the inverse demand function of price formation ofcopper.
The results of the study showed that all of these factors affecting copper price on
LME. However, exchange rate influences to the copper price are lesser when
compared with copper stock level and aluminium price. Both of the copper stock level
and aluminium price have a positive relationship to the copper price. However,
exchange rate has a negative relationship to the copper price.
From the normalized cointegrating vector test, it showed that stock level and
aluminium price is positively influence to the copper price. Real Effective exchange
rate is however negatively influence to the copper price. The result is in line with the
theory regarding price formation of copper (Qd = f (P, Ps, GDP, Exch. Rate) by
Tilton.
In conclusion, the factors (copper stock level, aluminium price and exchange rate) that
being identified in this study was found to have different degree of influence to
copper LME price. By understanding the relationship of the factors with copper LME
price, it could increase the competitiveness, reduce the risk, and improve the project
management and reduce the losses from price volatility. |
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