The electric vehicle sector is expected to account for one-third of the 10 million tons of new demand for copper in the coming years, with other areas of demand including electricity generation, transmission, distribution, automation, manufacturing capital expenditure, and cooling systems in data centers. This growth is particularly focused on the expansion of data centers related to artificial intelligence.
The increase in production of electric vehicles, solar panels, and grid investments in China, as well as a resurgence in manufacturing activity in the top consumer, has led to a rise in demand for copper. Its use in the power and construction industries has complemented this growth, as well as a scarcity of refined copper metal and concentrate. As a result, copper prices on the London Metal Exchange have reached two-year highs near $10,000 a ton.
This escalation can be attributed to several factors including diminishing stocks in LME registered warehouses and disruptions such as the closure of the Cobre mine in Panama. Consequently, analysts have reevaluated their forecasts for the copper market balance with expectations of significant shortages around 26 million tons this year. Graeme Train anticipates an increase in copper demand due to industrialization and urbanization in emerging economies like India where per capita consumption stands at only half a kilogram annually compared to 10 kilograms and seven kilograms respectively for China and developed nations respectively.
Overall, this sustained growth is expected to be driven by various sectors and emerging markets with technological advancements and infrastructure development playing a particular focus.
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