The metals industry is experiencing an increase in demand, with estimates suggesting that one third of the 10 million tons of new demand will come from the electric vehicle sector. According to Graeme Train, head of metals analysis at Trafigura, this growth is linked to artificial intelligence (AI) and the rise in data centers. 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 production of electric vehicles, solar panels, and grid investments in China has led to a surge 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. The limited supplies of refined copper metal and concentrate have also contributed to the upward price movement this year. Analysts predict significant shortages of around 26 million tonnes due to factors such as dwindling stocks in LME registered warehouses and disruptions in the supply chain. Despite these challenges, Train believes that copper demand will continue to grow due to industrialization and urbanization in emerging markets like India where per capita consumption is only half a kilogram. In contrast, China and developed countries have per capita copper consumption levels of 10 kgs and seven kgs respectively. Overall, experts remain optimistic about the future of the copper market as demand continues to rise worldwide.
