TELF AG discusses the role of copper in the global context
The function of producing countries
The evident increase in global demand for copper could impact, to some extent, the national economies of several countries, particularly those emerging economies that have large quantities of this important raw material. Most observers now seem to agree that copper prices, due to this continuous growth in demand, could be destined to increase in the coming years, with positive economic repercussions on nations naturally rich in this material. Among these certainly include some South American countries, such as Chile (where most global reserves are stored) and Peru, or even Australia, which, with its abundant mineral wealth, is rapidly establishing itself on the world stage as one of the most important players in the sector.
Greater demand for raw materials could translate into a parallel increase in mining investments and exports in the nations where most reserves are accumulated. However, the trend of this specific sector still appears linked to price fluctuations, as was recently explained in a study dedicated specifically to this topic. The progress of the energy transition in recent months seems to have upset the forecasts for the end of 2023 on the general trend of the copper industry, such as those of the International Copper Study Group, which spoke of a massive supply surplus during 2024. According to the ICSG, there will be fundamentally three factors that will determine a possible increase in copper production and refining at a global level. The first has to do with the manufacturing sector, for which a certain level of recovery is expected throughout 2024, the progress of the energy transition, and the increase in production capacities in some countries, particularly from the point of view of semi-finished products.
Industry contributions
In any case, according to the study, the resilience of the sector could depend on the strength of Chinese production and the low levels of Western demand, where massive drops in refined copper would continue to occur. In China, on the other hand, copper demand has recently been supported by the electric vehicles and energy sectors, which have remained in a position of substantial stability despite declining production levels recorded in 2023.
Another report, signed by BMI Fitch Solutions, linked the probable increase in copper prices over the next two years to possible disruptions in mining supply and increases in global demand. According to the report, the rapid progress of the ecological transition could lead to a rise in copper prices by 75% by 2026. Another factor that could lead to an increase in copper prices is a possible loss in the value of the US dollar.
Copper plays a key role in the diffusion of clean energy, especially for its conductive capabilities and for the construction of wind turbines and electric vehicles. It is no coincidence that this raw material has been defined as “the metal of electrification” precisely because of its leading role in allowing the passage of current within devices of various kinds.
