09/17/2020

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The Copper Industry Could Be Poised for Growth



Recovering From the Pandemic


Copper prices fell in March as the coronavirus pandemic set in. Now, demand for the metal is coming back, helping its price rebound.

Recently, Bank of America (BAC) raised its copper price forecasts. Analysts at the investment bank now predict the price of the metal will increase by 5.4% to $5,621 per ton in 2020 and will hit $6250 per ton in 2021.

Rising Interest in EVs Will Boost Demand for Copper


Copper is a powerful conductor of both heat and electricity, making it a crucial part of many electronic devices. It is also an important material for building electric cars.

Demand for electric vehicles is expected to surge in the coming decades. A 2019 study by research organization Bloomberg NEF predicts 57% of passenger cars will be electric and 81% of public busses will be electric by 2040.

Currently, the electric vehicle industry only accounts for 1% of global demand for copper, but analysts predict that number will go up to 10% in just ten years and will likely keep climbing as more and more countries, companies, and consumers become interested in electric vehicles.

Tensions Between China and Australia


China is the world’s largest buyer of refined copper and consumed about 13 million tons of the metal last year. For this reason, China has substantial influence in copper mining regions like Chile and Australia.

Relations between China and Australia have been strained recently. The Australian government asked for an investigation into how China handled the coronavirus outbreak. Australia also excluded the Chinese telecom company Huawei from its 5G networks.

Some Australian lawmakers have called for shifting the country’s copper exports away from China. However, as prices rise and China demands more and more of the material, the copper mining industry in Australia will likely be reluctant to cut off relationships with Chinese buyers.

In the coming weeks, investors will be carefully watching geopolitics, interest in electric vehicles, and other factors that influence the price of copper.


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