Copper prices have risen nearly 20% this year, reaching a record $11,000 per metric ton ($5.00 per pound) this week. A study has found that the pace of copper mining is unable to keep up with the current policy guidance in the United States, which aims to transition the country’s power and automotive infrastructure to renewable energy. Additionally, at the current rate, the demand for copper in renewable energy is projected to exceed copper mine production.
Given the “Inflation Reduction Act” signed in 2022, which mandates all vehicles to be electric by 2035, the situation is particularly pronounced. However, the amount of copper needed for electric vehicles is three to five times that of internal combustion engine vehicles, not to mention the copper required for upgrading the power grid.
Hedge fund manager Pierre Andurand has stated that copper prices could reach $40,000 per metric ton in the coming years. This expected growth in copper demand is attributed to global electrification, including electric vehicles, solar panels, wind farms, as well as military and data center applications.
Andurand, a former trader at Goldman Sachs who co-founded BlueGold Capital before establishing Andurand Capital, manages approximately $2 billion in assets. He further mentioned, “I think in the next four years or so, we could see $40,000 per metric ton ($18.18 per pound). I’m not saying it’s going to stay there indefinitely; eventually, we will get a supply response, but a supply response takes over five years.”
In another bullish analysis, Jeff Currie, a former Goldman Sachs executive who recently served as Chief Strategic Officer for Carlyle’s energy platform, stated in a media interview last week that copper is “the most convictional trade I’ve seen.”
Currie believes that copper prices could reach $15,000 per metric ton ($6.80 per pound).
It is projected that by 2050, the demand for copper in the transportation sector alone will increase by 11.1 times compared to 2022. Furthermore, it is estimated that by 2050, the global demand for copper for grid expansion will increase by 4.8 times compared to 2022. By 2030, the estimated supply gap for copper is expected to be close to 10 million metric tons.
