Core Viewpoint - The article analyzes the price movements of copper during the 2008 financial crisis, highlighting three distinct phases and the interplay between copper's financial and commodity attributes [1][2]. Phase Summaries Phase 1: Market Liquidity Risk Exposure (2007.08-2008.06) - During this phase, liquidity risks and the subprime mortgage crisis began to emerge, but did not yet exert widespread pressure on the financial system. Copper prices fluctuated within a range of approximately $6,400 to $8,700 per ton, with short-term liquidity risks causing temporary declines, but commodity attributes providing price support [3][8]. - The subprime mortgage market expanded due to low-interest rates and high-risk lending practices, leading to increased mortgage default rates as housing prices began to fall [4][5]. Phase 2: Subprime Crisis Escalation to Financial Crisis (2008.07-2008.10) - The liquidity crisis evolved into a debt crisis, with significant losses reported by major financial institutions. The TED spread surged, indicating a severe liquidity squeeze, and copper prices plummeted from around $8,500 per ton to approximately $4,000 per ton, effectively halving [10][12]. - The financial attributes of copper were negatively impacted by rising risk aversion and tightening liquidity, while demand from downstream sectors weakened significantly, leading to a substantial oversupply of refined copper [11][12]. Phase 3: Economic Stabilization and Copper Price Recovery (2008.11 onwards) - In response to the economic downturn, global central banks implemented aggressive monetary and fiscal policies, leading to a gradual stabilization of economic fundamentals. Copper prices began to recover, with a bottom price around $3,000 per ton at the end of 2008 [15][19]. - The S-shaped cost curve of copper mining contributed to a rapid rebound in prices, as the market transitioned from recession to recovery, with copper prices showing sensitivity to changes in liquidity conditions [20][21]. Key Insights - Understanding copper price fluctuations requires recognizing when its financial or commodity attributes dominate market behavior [24]. - When copper prices approach the lower end of the cost curve, price volatility tends to increase, leading to rapid rebounds after significant declines [24]. - Among base metals, copper is most closely tied to macroeconomic conditions, making market expectations of economic performance a critical factor in copper price determination [25].