Until recently, copper had been one of the few relative bright spots amid the global commodities sell-off. But “relative” is the key word here.

After all, copper already suffered a sharp decline in 2011, falling as much as 33.7% from its all-time high of $10,160 per metric ton to that year’s low of $6,735 per metric ton in late October. And it hasn’t come anywhere near that high since.

So, from that perspective, the red metal has already been through its collapse—it just happened to occur a few years before its peers.

Although copper isn’t nearly as crucial to Australia’s export economy as iron ore, it still ranks 11th among the country’s top 25 exports by value. And, of course, it’s also a key contributor to the earnings of two Aggressive Portfolio holdings, BHP Billiton Ltd. (ASX: BHP, NYSE: BHP) and Rio Tinto Ltd. (ASX: RIO, NYSE: RIO).

The high drama of 2011 and a jagged 2012 soon gave way to a comparatively somnambulant trading range between $6,500 per metric ton and $7,500 per metric ton that prevailed over a roughly 20-month period.

In early July, the red metal began a gradual decline, but still remained largely within the aforementioned trading range through year-end.

The three-month rolling forward contract on the London Metal Exchange slid 11.9% over the nearly six-month period that ended on December 30. Over that same period, by contrast, the price of iron ore tumbled by 25.8%, while the price of global benchmark Brent crude oil dropped 46%.

But at the outset of the new year, the glacial pace of copper’s decline turned into an outright collapse amid new fears of a slowing global economy. The World Bank announced that it had cut its forecast for global growth in 2015 to 3.0% from its earlier projection of 3.4%.

And it also reduced its forecast for China’s growth this year to 7.1% from 7.4%, while observing that the Middle Kingdom is in the midst of a “managed slowdown.” China is the world’s largest consumer of copper, accounting for about 45% of global demand.

As a result, copper plunged 12.3% in just two weeks, dropping to its lowest level in five years. It finally recovered some lost ground toward the end of last week, rising 3% in its biggest two-day rally in 15 months.

Just as news about China helped precipitate the sell-off, it also triggered the relief rally. China’s central bank announced stimulus measures for small businesses and the agriculture sector, while the country’s government said it planned to build new urban rail networks.

The Four Pillars

BHP has diversified its operations across the “four pillars” of iron ore, petroleum, copper and coal. Copper accounted for about 20.5% of the company’s fiscal 2014 (ended June 30) revenue. In December, Bloomberg reported that CEO Andrew Mackenzie said the firm plans to shift the focus of its investment in new projects away from iron ore in favor of copper.

Rio Tinto is not nearly as well diversified as BHP. The vast majority of its earnings are derived from iron ore, though the company also produces aluminum, copper, coal, diamonds and other minerals. Based on full-year 2013 data, Rio Tinto’s copper operations generated 7.7% of earnings before interest, taxation, depreciation and amortization (EBITDA).

Rio has teamed with BHP on a $6 billion project to develop one of the world’s largest untapped copper deposits. In late December, the Resolution Copper project, which is situated in Arizona, received approval from the government for a land-swap deal, which management says “provides a clear road map to commercial development.”

Production is expected to commence by the mid 2020s, and management believes the site could yield 500,000 metric tons of copper per year, equivalent to a quarter of annual U.S. consumption. Management estimates the resource could last for more than four decades.

Of course, while mining giants such as BHP and Rio Tinto can afford to take the long-term view, it’s worth reiterating that in the current environment the entire Basic Materials section of Australian Edge’s coverage universe should be considered part of our Dividend Watch List due to companies’ exposure to volatile commodities prices.

In addition to our company- and country-level concerns, it’s also worth considering where copper is headed next from a global macroeconomic standpoint.

An Ore With More

Owing to the red metal’s ubiquity, it’s considered a key economic indicator, with many semi-seriously referring to it as Dr. Copper, the metal with a PhD in economics.

More than 15 million metric tons of the red metal are used every year, in almost every home and vehicle, in parts and appliances as well as infrastructure projects, such as power-grid construction, and communications devices. Copper is especially important in the construction and manufacturing sectors.

And China’s rapid urbanization underpinned the past decade’s so-called global commodity supercycle, driven by the country’s seemingly insatiable consumption of base metals and other commodities.

However, now the pace of China’s expansion is slowing to levels just above where they were during the global financial crisis. One potentially mitigating factor is that the country’s 12th five-year plan concludes this year, which Bloomberg says could lead to a rush of infrastructure spending.

But even that is unlikely to be enough to remove the supply overhang. Projects that were initiated during the mining boom are set to enter production, leading to a copper market that would have been in oversupply even without flagging demand.

According to Bloomberg, new mines are expected to add another 1.6 million metric tons to supply this year, equivalent to 27% of the new supply projected for the period from 2014 through 2020.

While BHP believes the global copper market could return to deficit by 2018, Bloomberg says that may not happen until 2020. With so much hinging on Chinese demand, naturally there’s a wide variation in forecasts.

There are some factors that could hinder the ramp-up in supply, including mine outages and slower-than-expected production. And resource nationalism in certain third-world countries could also pinch production.

Nevertheless, although the commodities cycle has clearly turned, it will eventually turn again.

Dividend Watch List: It’s Different Down Under

Australian companies tend to pay out a specified percentage in dividends, based on a certain earnings metric, be it statutory net profit after tax (NPAT), underlying NPAT, or operating cash flow.

Dividend payout rates for Australian firms tend to vary more than they do for their Canadian and U.S. counterparts. That’s because Aussie firms are more debt-averse, and they’re typically not willing to maintain their payout ratio at all costs, including tapping into their cash reserves, borrowing, or selling assets.

Australia’s twice-yearly payouts are also different from the quarterly dividends that most U.S. companies make. You’ll also see some monthly payouts like Canada’s income trusts used to make.

Companies on our Dividend Watch List are there because of recent payout reductions, omissions, discontinuations and/or downward revisions to their 2014 or fiscal 2015 earnings guidance, with potential implications for final and interim dividends.

Note that the entire Basic Materials section of our How They Rate coverage universe should be considered part of the Watch List because all these companies are exposed to volatile resource prices. The same goes for our Oil & Gas companies.