Estimates suggest that a substantial portion of new demand for copper will come from various applications, with the electric vehicle sector accounting for one third of the 10 million tons of new demand. The remaining areas of demand include electricity generation, transmission, distribution, automation, manufacturing capital expenditure, and cooling systems in data centers, with a specific focus on the growth of data centers related to artificial intelligence.
The increase in production of electric vehicles, solar panels, and grid investments in China, along with a resurgence in manufacturing activity in the top consumer, has led to a rise in demand for copper. This has been driven by its use in the power and construction industries, complemented by a scarcity of refined copper metal and concentrate. As a result, copper prices on the London Metal Exchange have reached two-year highs near $10,000 a ton.
The escalation in copper prices can be attributed to diminishing stocks in LME registered warehouses, as well as disruptions such as the closure of the Cobre mine in Panama. Consequently, analysts have reevaluated their forecasts for the copper market balance, with expectations of significant shortages of around 26 million tons this year. Graeme Train anticipates an increase in copper demand due to industrialization and urbanization in emerging economies like India, where copper consumption per person annually is only half a kilogram.
Comparatively, in China and developed nations, per capita copper consumption stands at 10 kilograms and seven kilograms, respectively. Overall, the copper market is expected to experience sustained growth driven by various sectors and emerging markets, with a particular focus on technological advancements and infrastructure development.