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Over the next decade, growing activity in the electric car, power infrastructure, artificial intelligence, and automation sectors will result in an additional 10 million metric tonnes (MMT) of copper usage.
The energy shift, which includes electric vehicles and renewable energy, and technological advancements like automation and artificial intelligence have already increased demand for copper wire, which is used to conduct power.
Although estimates of the additional demand from these uses differ, Graeme Train, head of metals analysis at Trafigura, a Swiss company, stated that the electric car industry will account for one-third of the 10 million tonnes of additional demand.
Accelerating production of electric vehicles, solar panels, and grid investment in China and a pick-up in manufacturing activity in the top consumer have already boosted demand for copper used in the power and construction industries. That, combined with tight supplies of refined copper metal and concentrate, has propelled copper on the London Metal Exchange (LME) to two-year peaks near $10,000 a tonne.
Copper industry sources say part of the reason for the price surge is sliding stocks in LME-registered warehouses, which, at 121,200 tonnes, have dropped more than 35% since October last year.
Tight supplies of mined copper or concentrate, the feedstock for copper metal, due to disruptions such as the closure of First Quantum's opening new tab Cobre mine in Panama last year, have also helped fuel copper's upward price momentum this year.
Analysts have been revising their forecasts of the copper market balance since in December when Anglo American opened a new tab and also cut its production guidance. Some now expect significant shortages in the copper market, estimated at around 26 million tonnes this year.
Train expects copper demand to be bolstered by industrialisation and urbanisation in the emerging world, particularly in India, where consumption per person per year is only half a kg. In China and the developed world, per capita copper consumption is 10 kgs and seven kgs, respectively.
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