#Copper prices today driver

While internal combustion engine vehicles use about 22 kilograms of copper, hybrid EVs use 40 kilograms, plug-in hybrid EVs use 55 kilograms, battery EVs use 80 kilograms and battery electric buses use 253 kilograms.Įleni Joannides, principal copper analyst with research firm Wood Mackenzie, told INN that the amount of copper Europe will require to meet forecast EV demand will depend on what type of EVs spark consumer interest. In 2021, it led the world in EV sales, with a total of about 2.3 million units sold, and analysts expect that trend to continue in the coming years. As governments push forward with transportation network electrification and energy storage initiatives as a means to combat climate change, copper demand from this segment is expected to surge.Įurope is becoming a strong hotbed for copper use as its renewable energy sector grows.

#Copper prices today driver

However, the biggest driver of copper consumption in the renewable energy sector is rising global demand for electric vehicles (EVs), EV charging infrastructure and energy storage applications. Industrial production and construction activity in the Asian nation have been like rocket fuel for copper prices.Īdditionally, copper’s conductive properties are increasingly being sought after for use in renewable energy applications, including thermal, hydro, wind and solar energy. In recent decades, copper price spikes have been strongly tied to rising demand from China as the economic powerhouse injects government-backed funding into new housing and infrastructure. Rising demand for new homes and home renovations in both Asian and western economies is expected to support copper prices in the long term. In fact, construction is responsible for nearly half of global copper consumption. The ever-growing number of copper uses in everyday life - from building construction and electrical grids to electronic products and home appliances - make it the world’s third most-consumed metal.Ĭopper’s anti-corrosive and highly conductive properties are why it’s the go-to metal for the construction industry (for example, in copper pipes and copper wiring). Robust demand has long been one of the strongest factors driving copper prices. What key factors drive the price of copper?

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On the left hand side of the mean, the log-normal distribution shows that the grade-tonnage curve has a very short tail with far few reserves.”Ĭlick here to take a deep dive at Goehring & Rozencwajg. “Most reserves are located on the right side of the mean where the grade-tonnage curve has a long tail. More important, the log-normal shape of the grade-tonnage plot means that most of the reserves have likely already been added. “Lowering the cut-off grade clearly cannot go on indefinitely unlike interest rates there is a firm low at zero. It is a complicated but very important subject based on how copper porphyry deposits are geologically formed. “The copper industry’s ability to increase its reserve base by lowering its cut-off grade is nearing an end, regardless of how high copper prices go. The authors have calculated an industry average cut-off grade of 0.25%, down from 0.4% in the mid-2000s when the firm first started tracking producers’ reserve calculations at 115 mines across the globe responsible for four-fifths of total output. To those issues, the report adds copper miners’ habit of high-grading (mining your best quality ore first) and growing your reserves with a simple ploy – lowering cut-off grades when prices rise.Įven with prices well above $10,000 a tonne, these paper reserves cannot keep growing, according to Goehring & Rozencwajg, specifically at porphyry deposits which produce 80% of the world’s copper. Low and declining grades, uninspiring green and brownfield discoveries ( with a few exceptions) and thin, slow project pipelines have become rules of thumb in the copper mining industry. The rosy demand side for copper has been well documented and Goehring & Rozencwajg focuses on supply, specifically depletion in their latest commentary.ĭepletion, surprisingly, is not discussed that often in the industry and according to the authors is little understood, despite its fundamental importance for long-term supply trends.

Using $1.95 as our starting point, we expect copper prices to potentially peak near $15 per pound by the latter part of this decade.” “We would not be surprised to see copper prices again advance a minimum of seven-fold before this bull market is over. The fundamentals today are even more bullish. “The previous copper bull market took place between 20 and saw prices rise seven-fold: from $0.60 to $4.62 per pound.