According to experts in the metals industry, demand for new metal products is projected to increase by 10 million tons. Graeme Train, head of metals analysis at Trafigura, stated that approximately one-third of this demand would come from the electric vehicle sector. The remaining demand is attributed to areas such as electricity generation, transmission and distribution, automation, manufacturing capex, and cooling systems within data centers.
The growth in data centers is linked to artificial intelligence (AI), which has led to an increase in demand for copper used in the power and construction sectors. Copper prices on the London Metal Exchange (LME) have risen to near two-year highs at around $10,000 a ton due to limited supplies of refined copper metal and concentrate.
Sources in the copper industry have cited factors such as dwindling stocks in LME registered warehouses and disruptions in the supply chain as reasons for the price surge. First Quantum’s Cobre mine closure in Panama has also contributed to this 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.
Graeme Train believes that demand for copper will continue to grow due to industrialization and urbanization in emerging markets like India where per capita consumption is only half a kilogram compared to China and developed countries with per capita consumption levels of 10 kgs and seven kgs respectively. The outlook for the copper market remains positive as demand continues to rise worldwide across various sectors.