The metals industry is experiencing a surge in demand, with estimates suggesting that one third of the 10 million tons of new demand will come from the electric vehicle 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. The growth in data centers is linked to artificial intelligence (AI).
The production of electric vehicles, solar panels, and grid investments in China, along with increased manufacturing activity in the top consumer, has led to a rise in demand for copper used in the power and construction sectors. This has pushed copper prices on the London Metal Exchange (LME) to 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.
According to Graeme Train, head of metals analysis at Trafigura, industrialization and urbanization in emerging markets will continue to drive demand for copper. In contrast