From Electric Vehicles to Industrialization: The Surge in Demand for Copper in the Metals Industry

The demand for copper in the metals industry is expected to grow significantly in the coming years, with estimates suggesting that one third of the 10 million tons of new demand will come from the electric vehicle sector. According to Graeme Train, head of metals analysis at Trafigura, this growth is linked to areas such as electricity generation, transmission, distribution, automation, manufacturing capex, and cooling systems within data centers.

The production of electric vehicles and solar panels has led to a rise in demand for copper used in the power and construction sectors. Additionally, increased manufacturing activity in China and the top consumer has also contributed to this surge in demand. As a result, copper prices on the London Metal Exchange (LME) have soared to near two-year highs at around $10,000 a ton.

Sources in the copper industry have attributed this price surge to factors such as dwindling stocks in LME registered warehouses and disruptions in the supply chain. Specifically, the closure of First Quantum’s Cobre mine in Panama has contributed significantly to this year’s upward price movement. Analysts have adjusted their forecasts for the copper market balance due to these shortages and anticipate significant shortages of around 26 million tonnes this year.

Train believes 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. In contrast, China and developed countries have much higher per capita consumption levels of 10 kgs and seven kgs respectively. Given these factors, it seems that the outlook for the copper market remains positive as demand continues to rise worldwide across various sectors.