Copper resumed its rally on Wednesday, as analysts and executives expect increasing demand and likely low supply to drive prices even higher.
Copper for delivery in May was up 2.51% in afternoon trade, with futures at $4.1310 per pound ($9,088 a tonne) on the Comex market in New York.
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The industrial bellwether metal is crucial in the global push for a greener economy, and right now, the market is facing a supply crunch.
US’s post-pandemic recovery and the Biden Administration’s infrastructure plan are helping to build momentum for base metals.
Goldman Sachs sees prices average $11,000 per tonne over the next 12 months, according to the Business Insider. By 2025, the metal could be priced at $15,000 a tonne, a rise of 66%, Goldman said in a report titled “Copper is the new oil”.
“Discussions of peak oil demand overlook the fact that without a surge in the use of copper and other key metals, the substitution of renewables for oil will not happen,’ the bank said.
Demand will therefore significantly increase, by up to 900% to 8.7 million tonnes by 2030, the bank estimates. Should this process be slower, demand will still surge to 5.4 million tonnes, or by almost 600%.
BHP president of minerals for the Americas, Ragnar Udd, expressed his optimism for a growing demand in the future at the CRU World Copper Conference in Chile.
“A great example is electric vehicles. Policy signposts for rapid electric vehicle (EV) adoption were distinctly favourable over the last (12) months and we have revised our internal EV penetration forecasts upwards,” he said.
“These vehicles use four times as much copper as petrol-based cars, and they will also need more infrastructure to connect charging stations to the grid.”
BHP expects the world’s Paris-aligned emissions reduction targets to more than double the demand for copper and quadruple for nickel over the next 30 years.
“It’s all copper, copper, copper, copper, copper, copper,” said mining magnate Robert Friedland during the CRU World Copper Conference.
Mining companies will have to be “real heroes” and governments will need to accept the industry if the world is to successfully transition to clean energy and transport, said the co-chairman of Ivanhoe Mines.
Goldman Sachs metals strategist Nicholas Snowdon says environmental policies will drive a capex boom on par with the 1970s and 2000s over the course of the next decade and copper is the core of the green energy transition.
“We estimate nearly $16 trillion would have to go into green-focused infrastructure to achieve decarbonisation targets, compared to just $10 trillion in China during the last supercycle.” said Snowdon.