The World Copper Market Issues

Amid the worldwide popularity of precious metals like gold, silver, and lithium, the spotlight has been recently turned on copper, to the point that it is now widely revered as the “new oil” due to its crucial effects on the green future of industries.

Being considered the most significant battery material, the widespread use of copper in electric vehicles and green technology is by no means negligible.

In order to fulfill the goal of having a low-carbon future, red metal would be in urgent need, especially when there is not any economic substitute in its place.

In a modernized world in which every minute aspect of it has been ever more electrified, many attempts have been made to lower carbon emissions, and this indicates a soaring demand for the invaluable red metal.

In other words, sustainable development would be implausible without the presence of a huge amount of copper in the upcoming future to guarantee the advancement of green infrastructure and the evolution of the green industry.

With copper being the indispensable component of almost every kind of battery and different parts of electric vehicles, its rate of growth annually was estimated to be 1.97 percent between the years 2012 and 2019, and it is predicted that the demand for copper would reach new heights in a couple of decades ahead.

As the environmental concerns have been ever more raised, the mining industry will experience a tremendous surge in coming years, to such an extent that global copper production is expected to grow about 3% to 6% annually by 2030 if countries around the world are supposed to fulfill the goals of the Paris Agreement on climate change.

So one of the world copper market issues is its soaring demand that is closely related to countries’ eagerness to implement the standard measures of the Paris Agreement and put in using green energies instead of fuel ones.

To be specific, it is estimated that copper demand would increase 300 percent from its current amount of 20 million tonnes each year in the global market to 60 million by 2050.

Such a great demand that is more than all of the humans consumed copper from the beginning of the Bronze Age would inevitably require a push on the supply side, urging miners to rush out their exploration even in the remotest and the most unreachable places of the Arctic and sea.

With such a high demand on the one hand and the copper supply shortage, on the other hand, a demand-supply imbalance would be eminent, involving the increased risk to the environment and economy.

Come along with us to gain further insight into the world copper market issues.

The booming copper demand and the widened gap of demand and supply

With the global transition to a green future, considerable demand has risen for copper and what follows is the attraction of substantial investment in the valuable red metal.

At the moment, the sections of construction, transportation, the infrastructure of renewable energy as well as industrial technology are copper’s major end users.

While it is estimated that the demand for the vehicles-related domain would rise 117% from 2020 to 2040, the demand out of the technology sector in its own turn would rise at a CAGR of 7.2 % to the overall amount of approximately 17 Mt by 2040.

Since EVs use four times the copper used in ICE vehicles, as demand for electric vehicles is stimulated, so does it for electronic components, especially microchips.

Needless to say, more than twenty-five percent of the consumed copper in 2050 would be allocated to the extra demand assigned to fulfilling the goal of net zero emissions.

With such an extreme boost on the demand side, the amount of supply needed to satisfy it bring out critical issues on its own term.

Currently, with the extreme volatilities of the market, China’s real estate chaos as well as the worldwide energy crisis, the supply-demand balance of copper has been seriously disturbed.

It is estimated that a huge gap would be opened up in copper supply and demand, which would exceed the amount of 8 Mt by 2030.

Hence, in the upcoming years, a massive deficit would step into the copper market as the copper supply is falling behind the huge demand rising sharply from the energy and constructing sections, along with the widespread use of electric vehicles.

With copper consumption exceeding its production somewhere around 2024, it is of little wonder to see copper prices reach new heights.

Then with such a deficit in the copper market, refined copper production would be impeded as the rate of growth of the metal’s production would be stalled in case of the absence of large-scale investment.

While many metals are struggling on their supply side without any push by the side of the demand, the world copper market issues today has come out to be a bit thorny with the booming demand and the supply shortage at the same time.

The copper supply constraints

Maybe because currently, the copper prices are not that much shouted up, many might ponder that the short-term supply of copper would come up with the high demand.

But the real nub of the matter is despite the existence of many mining projects that seem to be ready for extraction of copper, due to some regulating reluctance, the proliferation of the projects has been hindered.

With the reduction of copper grade at these new mines, although their capacity would be expanded by around 7% in the next several years, owing to the expensive cost of such projects, companies are very hesitant about taking any serious measures in this regard.

Yet, it is to be hoped that further advancement in the technologies of the mining industry would overcome such downfalls in resources and ore grades.

But still, the prices and expenses of investment are supposed to be too high to stimulate miners to start their copper extraction.

Moreover, it is to be said that the top 3 hundred raw copper around the world are either situated very close to the lands of Indigenous People or are located in the special conserved region or even are discovered in high water risk districts.

The growing gap between supply and demand would be conducive to a push toward the use of more land and water that might be coupled with negative repercussions by the side of locals and native people.

Given the fact that copper would not lose any of its chemical characteristics in the recycling process, a surge in the second use of copper might be observed, but that is by no means sufficient because copper might be in use for decades in its first consumption.

In addition, with the compelling need to rush out extraction at the more problematic mines that are situated deeper in the Earth, more trashes and tailings (a harmful by-product of the copper extraction that needs to be carefully and safely disposed of) are produced.

This would involve irreparably terrible risks to climate and rights of humans, while a vast expansion of cooper usually has its own inherent severe risks at the same time.

Hence extraction from the mines should be done responsibly and with the utmost attention and consideration to evade the probable damages it may incur to the locals and surrounding places in order to prevent the previous civil-industrial conundrums in most countries that produce the precious red metal.

Other issues affecting the world copper market

When it comes to the world copper market issues in 2022, unlike many other metals, the copper market just slightly has been under the influence of the Russian-Ukraine war, having its price risen not very sharply.

That is because the shortage of the copper supply has not been felt very tangibly at the moment, especially when it requires a lower amount of energy to be produced in comparison to other metals.

Therefore, as one of the main fallouts of the war is the rise in the prices of energy, the copper market would be less affected.

At the same time, the copper market is not very fluctuated amid the volatile markets of other metals due to the fact that the copper demand risen from China has been hindered as a result of the country’s collapse of the annual economic growth to 2% from 10% as well as the turmoil of its property market that has allocated 9% of the amount of the copper consumed around the world.

Moreover, because China which has been the main consumer of metals, was thrown into the supply of energy chaos and its factories were closed, the metal market has become a bit uncertain as an adverse trend has emerged in copper prices.

It goes without saying that what happens in Peru and Chile, which are the biggest producers of copper, would affect the cooper market as well. Due to these countries’ tendency toward imposing taxes on copper benefits, investors would restrain from starting new mining projects.

Finally, it has been suggested that the use of copper might be limited due to many countries’ national security measures associated with the battery metals in the long run.

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