Base Metals
January 19, 2023

Why is copper the driving tool for green world?

Copper is frequently seen as a leading indication of global economic health, Let's look at the forces influencing copper and what the future holds for the copper market.

Copper finished Friday at $3.3865 and has been in a downturn for some time. The 52-week high for the stock is $ 4.9375, and the 52-week low is $ 3.2115. The copper price fell following the release of the US employment data, but this is not the complete picture. Let's look at the forces influencing copper and what the future holds for the copper market.

The Big China:

China plays a very important role in both the supply and the demand for the copper metal as the China has a significant role in both the production and demand for copper metal, accounting for 54% of world copper demand in 2021. To begin, the government's strict 'zero Covid' laws have resulted in a major drop in demand for the industrial sector of the economy. Furthermore, the recent housing crisis is making matters worse, as civil and building construction accounts for around 23% of China's copper end-use. There is much too much focus on China's 20th National Congress in Beijing, which will take place on October 16, 2022, with markets anticipating the government reducing its covid regulations and announcing a strategy to address the housing issue. This might pave the way for copper pricing in the short future. The long-term outlook for copper demand from China is the 'Made in China 2025' initiative, which requires the transformation of old factories into smart factories, resulting in a massive need for copper.

The Green Wave:

As the world gradually transitions away from fossil fuels, copper is expected to be in high demand in the medium to long term for a greener planet. Copper, due to its high conductivity and ease of moulding, is essential in the renewable energy and electric car industries. Copper consumption might climb by 3 million MT per year during the next decade. While traditional energy demand continues to boost demand, demand from the greener energy world has the potential to push demand much quicker and at a substantially higher price. Electric car usage is also expected to boost copper demand over the coming decade. An electric vehicle consumes three times the amount of copper as a standard IC Engine vehicle, and the need will continue to rise as EV charging infrastructure and energy storage options become more prevalent.