Copper demand is expected to grow in various sectors, including electric vehicles, data centers, and automation. The rise in demand is linked to the growth of artificial intelligence (AI), which has led to an increase in manufacturing activity and production of solar panels and grid investments in China.
The production of these products has led to a rise in demand for copper used in the power and construction sectors. The limited supplies of refined copper metal and concentrate have pushed prices on the London Metal Exchange (LME) near two-year highs at around $10,000 a ton. Sources in the copper industry point to factors such as dwindling stocks in LME registered warehouses, which have decreased by over 35% since October last year, as reasons for the price surge. Disruptions in the supply chain, such as the closure of First Quantum’s Cobre mine in Panama, have also contributed to the upward price movement this year.
Analysts have adjusted their forecasts for the copper market balance, with some anticipating significant shortages of around 26 million tonnes this year. Graeme Train, head of metals analysis at Trafigura, believes that one third of the new demand will come from electric vehicles sector. The rest of the demand is attributed to areas such as electricity generation, transmission, distribution, automation manufacturing capex and cooling systems within data centers.
Train also points out that copper demand will continue to grow due to industrialization and urbanization in emerging markets like India where per capita consumption is only half a kilogram compared with seven kgs and ten kgs respectively per capita consumption levels of developed countries and China respectively. As per Train’s belief the outlook for copper market remains positive as demand continues to rise worldwide across different sectors.