Trafigura, a prominent commodity trader, has projected a substantial increase in copper consumption over the next decade, driven by flourishing activity in sectors such as electric vehicles, power infrastructure, artificial intelligence, and automation. According to Graeme Train, head of metals analysis at Trafigura, these technological developments are expected to generate at least 10 million metric tons of additional copper demand, with a significant portion attributed to applications in the electric vehicle sector, electricity generation, transmission and distribution, automation, manufacturing capex, and cooling systems within data centers.
The rise in demand for copper cable, used in conducting electricity, has been propelled by the energy transition, including the increasing adoption of electric vehicles and renewable energy. The accelerated production of electric vehicles, solar panels, and grid investment in China, along with a resurgence in manufacturing activity, has already bolstered demand for copper in the power and construction industries.
This surge in demand, coupled with tight supplies of refined copper metal and concentrate, has propelled copper prices on the London Metal Exchange (LME) to two-year peaks near $10,000 a ton. Factors contributing to the price surge include diminishing stocks in LME registered warehouses, which have decreased by over 35% since October last year, as well as disruptions in copper concentrate supply due to events such as the closure of First Quantum’s Cobre mine in Panama.
Analysts have revised their forecasts for the copper market balance, with expectations of significant shortages amounting to around 26 million tonnes this year. Train anticipates that copper demand will be further bolstered by industrialization and urbanization in emerging economies, particularly in India, where per capita copper consumption is currently only half a kilogram, compared to 10 kilograms in China and seven kilograms in the developed world.
The outlook for copper demand remains robust, driven by the evolving technological landscape and the ongoing energy transition, pointing towards a sustained surge in copper consumption in the coming years.