Copper, often referred to as the "metal of the future," is set to experience a significant surge in demand as industries across the globe ramp up their consumption in response to economic and technological shifts.
As the world moves toward electrification, renewable energy and more investment into infrastructure, copper has become an essential commodity.This has resulted in heightened investor interest and demand for the commodity.In 2024, a combination of factors including US Federal Reserve rate cuts and an economic stimulus in China is poised to drive copper prices to new heights.
Key Drivers of Copper Demand Growth
The demand for copper is expected to grow at a steady pace in 2024, bolstered by its indispensable role in several industries.
According to consensus, copper demand is projected to increase by 2.6% annually, underpinned by the rising production of electric vehicles (EVs), renewable energy projects, and global infrastructure developments (MINING.COM,2024)
EVs represent a pivotal sector driving copper consumption. As nations worldwide strive to meet net-zero emissions goals, the adoption of EVs is growing rapidly. Copper is a crucial component in EV batteries, motors, and charging infrastructure.
On average, an electric vehicle requires about four times more copper than a conventional internal combustion engine vehicle, making the metal vital to the transition toward greener transportation. The compounded annual growth rate (CAGR) for copper demand in this sector is expected to reach an impressive 10.7% by the end of 2024 (Mikanikrezai, Cole and Fastmarkets Team, 2024)
Renewable Energy and Electrification
Copper’s unparalleled conductivity makes it a critical element in renewable energy technologies such as wind turbines and solar panels, as well as in the broader push for electrification. The ongoing global transition toward renewable energy sources, supported by government initiatives and corporate commitments, is another major factor contributing to copper's increased demand.
Economic Policies Supporting Copper Price Surge
Several macroeconomic factors are also impacting copper prices, which are projected to reach record highs in Q4 2024. One of the key catalysts is the US Federal Reserve’s decision to cut interest rates, which has been a major driver of commodity price movements.
With the US dollar expected to weaken following the cuts, copper prices are likely to increase as the cost of dollar-denominated commodities becomes cheaper for holders of other currencies.
China’s Economic Stimulus
China, the world’s largest consumer of copper, is set to play a pivotal role in boosting demand for the commodity further. In 2024, the Chinese government is expected to roll out a significant US$560 billion economic stimulus package aimed at revitalising its slowing economy.This package includes major investments in infrastructure and green energy,both of which are copper-intensive sectors (Mikanikrezai, Cole and Fastmarkets Team, 2024).
As China accelerates the construction of new energy grids,housing projects, and transportation networks, copper demand is projected to increase significantly. With China’s share of global copper consumption currently hovering around 55%,this stimulus is expected to have a significant impact on the global copper market.
Market Outlook and Price Projections
Copper prices have already shown resilience throughout 2024,trading at levels above US$8,000 per tonne. However, as we move into the final quarter of the year, prices are expected to break previous records, potentially averaging US$10,265 per tonne, according to consensus (MINING.COM, 2024). This pricel evel would surpass the previous all-time high set in 2022.
In summary, the outlook for copper for the remainder of 2024 remains with is a positive one, supported by strong demand growth that is driven by the electrification of transportation, renewable energy expansion, and infrastructure investments, particularly in China.
Coupled with favourable macroeconomic conditions such as theUS Federal Reserve’s rate cuts and a substantial Chinese economic stimulus, copper prices could reach new heights in Q4 2024.
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References –
MINING.COM. (2024). Copper prices to hit record high in Q42024 on Fed cuts and China stimulus – Fastmarkets. [online] Available at: https://www.mining.com/copper-prices-to-hit-record-high-in-q4-2024-on-fed-cuts-and-china-stimulus-fastmarkets/.
Mikanikrezai, B., Cole, A. and Fastmarkets Team (2024).Copper prices in 2024 and 2025: a global overview and analysis -Fastmarkets. [online] Fastmarkets. Available at:https://www.fastmarkets.com/insights/copper-prices-in-2024-and-2025-a-global-overview-and-analysis/.
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