Recycling or Demand Management †Free Samples to Students

Question: Discuss about the Recycling or Demand Management. Answer: Introduction: In terms of economics, prices of a commodity have been majorly driven by the demand and supply side scenario. Increasing demand of a resource has always made a positive impact on the prices leading towards incline in the commodity prices (Forstater, 2017). In contrast, increase in the supply of resource in a free market may lead to a decline in prices of the commodity. In the study, the impact of the rising demand for copper in Australia on the prices of the commodity has been described providing supporting facts and evidence. In the article, McHugh (2017) indicates that growing popularity of electric automotive and renewable energy industries have contributed towards the increasing demand of copper in Australia. In the meanwhile, the demand side factor has transformed the forecasts for the copper mining industry as well as the investors in Australia. Due to a surge in demand, the price of the red metal can see a buoyant upside rally in the future. Precisely, electric vehicles are run on lithium-ion batteries and copper is one of the main components of the batteries (McHugh, 2017). Therefore, increasing demand of electric automotive can support the positive price outlook of the red metal. Basically, the bullish outlook for copper is good news for the metal mining companies and investors (Giurco Petrie, 2017). In the current demand scenario of copper, the economists and metal experts are seemed to be bullish in red metal. As Australian is the sixth largest producer of copper in the global market, the rise in demand will certainly make a positive impact on the copper prices. According to John Fennell, the CEO of the International Copper Association (ICA) Australia, increase in demand for electric vehicle and renewable energy such as solar energy will play major roles lifting the copper mining industry in Australia (McHugh, 2017). According to the published reports of ICA, over two million electric automobiles are in use internationally whereas 750,000 electric cars were sold on 2016 alone (McHugh, 2017). In terms of demand from the renewable energy industry, the need for copper is four times more in the sector in compared to the coal-powered energy industry (McHugh, 2017). On the other hand, urbanisation in the developing economies such as China and India will boost the demand for the red metal as it is the fundamental component of building constructions (Carrasco, Carrasco Jara, 2014). Influenced by the bullish market outlook of copper, BHP Billiton has made an announcement to spend $600 million in upgrading the infrastructure of the copper mining industry in Australia. The estimated report also shows that by 2030, the annual demand for copper will increase by around 40 million tonnes fuelling the price of the commodity. Due to clarity in demand side, copper is currently trading around US$ 6,367 per tonne on the London Metals Exchange up from US$ 5,633 per tonne in May this year (McHugh, 2017). According to the economic forecast of the Mineral Council of Australia, the rising price of copper will become a major issue for the Australian copper consumers in the future. Additionally, the export of copper from Australia has drastically gone down due to the high level of consumption in the domestic market. Furthermore, it is expected that the continuous increase in the demand for copper will lead to lower supply in the upcoming years (Giurco Petrie, 2017). For instance, the natural resources of copper are limited in number and the current production of the copper mines will not be sufficient to meet the growing needs of the consumers. Hence, an undersupply will be faced in the upcoming future that will further lead to the rise of copper price in the Australian market. By applying the theory of demand and supply, the demand for copper is increasing at a tremendous rate that is increasing the price of the commodity. However, if no step in taken in form of finding new copper resources, the Australian economy will face a shortage of copper supply in the future that will further impact the market equilibrium (Bochet, ?lk?l?, Moulin Sethuraman, 2012). Hence, a diagram has been presented herein below to understand the impact of demand and supply for copper in the Australian market: From the above diagram, it can be seen that the increase in the level of quantity demanded is quite high that leads to the rightward shift in the demand curve from D to D1. On the other hand, the fall in the supply will be considerably less that will lead to the leftward shift in the supply curve from S to S1. Hence, an increase in the quantity consumption can be evident from Q to Q1, whereas the market equilibrium shifts from E to E1 resulting in an increase in the price from P to P1 (Forstater, 2017). Furthermore, it is important to note that the elasticity of demand for copper in inelastic in nature. Copper is a necessary product and a high change in the price will have a small impact on the quantity demanded. However, a small rise in the quantity demanded will have a high rate of increase in the price level (Xiao, Luo Jin, 2009). A figure has been presented herein below for further understanding: It can be seen from the above figure that copper has inelastic demand, which is presented by a higher percentage of change in price as compared to the percentage of change in quantity demanded (Hattwick, Brown Sailors, 2014). Hence, it is important for the Australian Government to take necessary steps in order to maintain equilibrium price in the copper industry. For instance, the Australian Government can promote private mining companies to discover more resources of copper in the country. It will eliminate the problem of undersupply in the future. Furthermore, the Australian government can make use of price flooring policy to maintain an equilibrium price of copper in the market (Liu Tomsovic, 2015). Driven the increasing demand from the global market has developed a bullish price trend for copper in Australia. As per the discussion, the forecasts and existing data have supported the argument of price rise of the red metal. The indicators are significantly positive as far as the demand side of the commodity is concerned. Moreover, recent investment in the copper mining sector in Australia will also encourage the metal mining companies to show more intent. Conclusively, major demand side growth has been the leading factor fuelling the price rise of the commodity to a certain level. References Bochet, O., ?lk?l?, R., Moulin, H., Sethuraman, J. (2012). Balancing supply and demand under bilateral constraints.Theoretical Economics,7(3), 395-423. Carrasco, P., Carrasco, P., Jara, E. (2014). The economic impact of correct sampling and analysis practices in the copper mining industry.Chemometrics And Intelligent Laboratory Systems,74(1), 209-213. Forstater, M. (2017).Economics(3rd ed.). London: A. C. Black. Giurco, D., Petrie, J. (2017). Strategies for reducing the carbon footprint of copper: New technologies, more recycling or demand management?.Minerals Engineering,20(9), 842-853. Hattwick, R., Brown, B., Sailors, J. (2014).Demand, supply, and the market mechanism(5th ed.). Englewood Cliffs, N.J.: Prentice-Hall. Liu, G., Tomsovic, K. (2015). Robust unit commitment considering uncertain demand response.Electric Power Systems Research,119, 126-137. McHugh, B. (2017).Copper demand up due to surge in electric vehicles and renewable energy targets.ABC Rural. Retrieved August 2017, from https://www.abc.net.au/news/rural/2017-08-15/copper-demand-and-price-up-on-electric-vehicle-demand/8799106 Xiao, T., Luo, J., Jin, J. (2009). Coordination of a Supply Chain with Demand Stimulation and Random Demand Disruption.International Journal Of Information Systems And Supply Chain Management,2(1), 1-15.