Copper is Poised for a "golden Decade": Counting the 3 Advantages in Demand

The green revolution will affect the direction of the commodity market, especially copper. Copper is not without reason the darling of the current green transition.

1. copper has three major advantages:

Firstly, copper is the safest and most effective metal for power generation with multiple uses; Secondly, copper is lightweight and ductile, relatively inexpensive, and has a clear advantage in price over other similar metals (such as gold and silver) with similar conductivity; Thirdly, copper is entirely recyclable.

2. It is expected that copper will have excess demand in the next decade.

Mainly from the following aspects:

Firstly, with the development of the green transition, the needs of the environment, government, and economic development will combine to push the demand for green energy production. Data shows that the consumption of copper in wind energy and solar energy is several times that of fossil fuels.

Secondly, the development of electric vehicles and related industries will also promote the demand for copper. Cars are the largest source of consumer demand for copper, and electric vehicles consume four times as much copper as traditional cars.

Market research firm IHS MARKET recently raised its forecast for electric vehicle penetration, increasing sales forecasts for electric vehicles in 2025 and 2030 from 12% and 18%, respectively, to 15% and 23%. And this is still a conservative estimate. UBS Group boldly predicts that by 2030, nearly half of all new car sales will come from electric vehicles, and traditional cars powered by internal combustion engines will disappear completely by 2040.

For electric vehicles, the biggest copper consumption is in energy storage. A 3.3-kilowatt charger contains 0.7 kilograms of copper, and a 200-kilowatt charger contains 8 kilograms of copper. Commodity consulting firm Wood Mackenzie predicts that there will be 20 million new electric vehicle charging stations by 2030.

Ex HF portfolio manager Rogue Trader modeled future copper demand, like copper bus bar strip, based on existing information and resources. Rogue first calculated the copper demand that renewable energy production investment will stimulate, predicting that copper demand will increase by about 17 million tons in the next decade. Secondly, Rogue used the most conservative forecast model for electric vehicle copper demand and predicted that copper demand, such as 3mm copper rod, will increase by 16.1 million tons in the next decade in the most ideal situation, and 8.3 million tons in the worst case.

In addition to the copper demand for charging station construction, Rogue believes that if the development of electric vehicles is not prosperous, its excess demand for copper will reach 26 million tons in the next decade, with an annual demand increase remaining between 2.1 million and 3.1 million tons. In the case of good development, the copper demand for electric vehicles will add 2.2 million to 4.7 million tons per year, and the ten-year demand increase will reach 34 million tons.

Although there are still many variables in the next decade, Rogue believes that with the development of the green transition, the demand for electric vehicles and renewable energy production will not decline, so the demand for copper will continue to rise in the future.