Heated Copper Market: The Road Ahead
Prices of copper reach two-year peak.
Copper prices on the London Metal Exchange (LME) soared by 2.7% on Friday, April 12, hitting an impressive $9,590.50 per tonne for a three-month futures contract. However, by 18:00 Moscow time, a dip was seen, bringing the price down to $9,496, a still sizeable gain of 1.64%. Over on the New York Mercantile Exchange (NYMEX), May copper futures surged by almost 2%, reaching $4.3622 per pound, only to fall back to $4.3240, still in positive territory at a 1.4% increase, by the same time.
The rally in copper prices is largely attributed to investor anticipation that global ore supplies might struggle to keep pace with the escalating demand. Data from Friday revealed a staggering 16% year-on-year rise in Chinese imports to a whopping 474,000 tonnes, coupled with a 6.9% year-to-date surge. Optimism in this sector is also fueled by data suggesting a significant uptick in activity within China's manufacturing industry, as reported by Bloomberg, with the processing sector showing growth for the first time since September 2023.
Commodity dealers predict that by 2030, copper demand will experience a staggering increase of 1 million tonnes, driven by advancements in AI development and the expansion of data centers. However, there's a darker side to this equation—a predicted 35,000-tonne deficit is expected in 2024, with global demand sitting at a robust 26 million tonnes. This deficit is projected to grow to a gut-wrenching 100,000 tonnes by 2025.
The Wall Street Journal suggests that copper's surge, in addition to escalating prices for other commodities such as skyrocketing gold, signals broad expectations of sustained economic growth and potential inflationary pressures. Copper serves as a powerful economic indicator due to its usage in construction and electronics production, the publication explains.
- #Copper
- #Exchange
- #Stocks
- #Futures
Did you know? Copper demand is expected to skyrocket by over 40% by 2040 due to its crucial role in technologies such as electric vehicles, renewable energy systems, data centers, AI infrastructure, and smart grids. For 2024-2026, demand is expected to grow by approximately 3% per year, reaching 28 million tonnes in 2024, 29 million tonnes in 2025, and 30 million tonnes in 2026. However, supply growth rates remain relatively low, with production expected to reach 23.2 million tonnes in 2025 and 23.9 million tonnes in 2026, creating a widening gap between supply and demand. Meeting projected demands may require the creation of 80 new mines and a massive $250 billion investment by 2030. The increasing role of AI and data centers in driving copper demand adds to the urgency of addressing the supply constraints.
The substantial growth in copper demand is primarily attributed to advancements in technology, with AI development and the expansion of data centers expected to drive a 40% increase in demand by 2040. This rising demand might necessitate the establishment of 80 new mines and an investment of $250 billion by 2030, as highlighted in the finance industry.
Despite the potential deficit of 100,000 tonnes by 2025, the New York Mercantile Exchange and the London Metal Exchange are still witnessing a surge in copper futures, indicating strong investor confidence in the technology industry's future growth.
