Will copper prices reach an all-time-high in 2023?

Copper is a vital element in the global shift towards clean energy sources, as it plays a significant role in the development and implementation of renewable energy technologies like wind and solar power. According to a Copper Development Association (CDA) ) summary, the use of copper in solar and wind energy generation is 4-6 times higher than in fossil fuel-based systems. This is because copper's excellent conductivity and durability make it ideal for efficiently distributing electricity over long distances from wind and solar farms to households and factories. Additionally, copper is a crucial component in electric vehicles (EVs), with battery electric vehicles containing approximately 183 lbs of copper (more than 4 times the amount needed for ICE cars). This metal is used in various parts of an EV, including the electric motor, battery, inverters, and wiring. Furthermore, the growing demand for charging infrastructure to support the increasing number of EVs on the road adds to the rising copper demand, as copper is extensively used in constructing charging stations.

As the Financial Times reports, Trafigura forecasts a surge of copper prices in 2023 due to a rebound in Chinese demand as well as already low stockpiles.

“I think it’s very likely in the next 12 months that we will see a new high,” Bintas said at the FT Commodity Global Summit in Lausanne, Switzerland.

Goldman Sachs expects the world to run out of visible copper inventories by the third quarter of this year if demand in China continues to power ahead as strongly as it did in February.

This increase in global demand is facing struggles to increase production in the near-term:

Mining executives say it is increasingly difficult to boost new supply of copper with declining grades. Mining billionaire Robert Friedland told the Financial Times it took him 28 years to develop the vast Kamoa-Kakula mine in the Democratic Republic of Congo, which is ramping up to supply 650,000 tonnes by the end of next year.