50% increase in copper demand forecast over next 20 years
The ever-growing market for electric vehicles will cause a huge increase in demand for copper in the coming years.
With other factors coming into play too, the metal could be in store for a price surge in 2021.
Research by Canalys, the technology analyst, shows that global sales of EVs in 2020 increased by 39% to 3.1m units from the year before. Overall sales in the car market declined by 14%.
The Canalys report also forecasted the number of EVs to rise to 30m in 2028. This would mean EVs will represent nearly 50% of all cars sold globally by 2030.
Internal combustion engine vehicles require up to 23kg of copper each, whereas EVs use 40kg of copper, and plug-in hybrid EVs use 60kg.
Therefore the transition from internal combustion engine vehicles to EVs also means a higher demand for copper, and pressure on supply.
The Copper Alliance has projected a 50% increase in demand for copper over the next 20 years.
With other economic forces coming into play, including a Chinese stimulus to support copper demand, and the expected global recovery, Canaccord Genuity mining analysts are predicting a significant price increase over 2021.
“We now expect copper prices to average $3.50/lb in 2021, an approximate 17% increase on our previous forecast of $3.00/lb,” Canaccord said.
Previous low prices have constrained supply in recent years, holding back investment in new mining projects.
James Johnstone, co-head of emerging and frontier markets at RWC Partners, says there “needs to be a price blowout to bring on the new supply”.
London-listed copper miners will be on high alert.