Week commencing: 13/09/2021 Issue: 17
What is Doctor Copper?
Copper is a wide-spread metal used in numerous applications from electronics to power generation. Often Copper is referred to as Doctor Copper for its alleged ability to act as an indicator of the health of the world economy. According to research over the past 20 years changes in Copper prices have had a 65% correlation with the global manufacturing Purchasing Managers Index (PMI), a key sign of global development. During 2021 Copper prices have hit decade highs, as green energy demand and infrastructure projects continue to grow rapidly. If the Copper price begins to decline it may indicate a decrease in demand and a pending economic stoppage. Leading Copper analysts suggest that Copper is an asset that should benefit from a cyclical reflationary rebound in the near future and green energy surge over a longer time period.
What impact will the demand for Copper in China have?
China is the world’s largest consumer of Copper, accounting for half of all global consumption. Data states that Asia accounted for 67% of Copper consumption in 2019, equating to 23.7 million tonnes. Historically, Chinas economy has supported in justifying the price of Copper due to various infrastructure projects and new developments. It is said that Copper is mainly used to make electric cables and is indispensable to the country’s infrastructure builders. Analysts suggest the countries appetite for Copper is picking up rapidly, since recovering from the effects of the coronavirus pandemic on the economy. It is said that China’s recovery has triggered a price jump for many non-ferrous metals and shares in mining and trading companies have escalated, such as Zijin Mining Group’s price has soared by 31%.
How will plans for sustainability impact the Copper price?
The growing global focus on renewable energy and renewal of infrastructure should lead to an increase in demand for raw and processed copper from numerous sources. With electric vehicles potentially equating to 16% of global light vehicles sales by 2025 and nearly 30% by 2030, increasing the demand for Copper. Battery-powered electric vehicles and hybrids use two to four times as much Copper as standard petrol or diesel vehicles. The world is also taking a positive step closer to renewable energy sources from wind to solar power, Copper is an essential element of renewable energy efficiency. Research suggests that sustainable energy can require up to 50% more Copper, compared to fossil fuels. These crucial elements of a global transition should be reflected in the Copper price as the metal will have an increased application purpose in the upcoming years.
How can ILF help you?
ILF continue to provide customers with the best available supply of Copper, meeting customers’ needs and retaining high inventory levels. ILF are excited for what the future of the Copper industry holds and supporting customers with their new demand.
Have you had an increase in Copper demand? If you have been impacted, we would love to hear from you and find a solution to your challenges.