The electric vehicle industry is expected to account for one third of the 10 million tons of new demand for copper, with the remaining areas of demand including electricity generation, transmission, distribution, automation, manufacturing capital expenditure, and cooling systems in data centers. The growth of data centers related to artificial intelligence is particularly driving demand in this sector.
The increase in production of electric vehicles, solar panels, and grid investments in China 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.
However, analysts have reevaluated their forecasts for the copper market balance due to diminishing stocks in LME registered warehouses and disruptions such as the closure of the Cobre mine in Panama. Consequently, expectations of significant shortages of around 26 million tons this year have emerged. Graeme Train anticipates an increase in copper demand due to industrialization and urbanization in emerging economies like India, where per capita consumption stands at only half a kilogram annually compared to 10 kilograms per capita in developed nations like China.
