Analysis of Copper Demand and Supply in the Face of Global Electrification

Copper prices have fluctuated due to economic concerns but are currently rising. The shift towards electrification and the energy transition is driving an increase in copper demand for electric vehicles, renewable energy infrastructure like windmills and solar panels, and data centers. Despite a weakening Chinese property market, global copper demand is projected to increase by approximately 1 million tons annually while supply growth will be stagnant or negative in the next few years. The market is poised for a significant deficit as supply growth is slow and mainly from unstable countries, with the challenge of bringing new mines taking a decade or more. However, the market is not yet reflecting this impending deficit due to short-term trading strategies by hedge funds and a lack of long-term position holders, failing to send a price signal. The mismatch between increasing demand and limited supply growth indicates a long-term upward trend in copper prices.