Since the beginning of this year, copper prices have risen sharply and have far outpaced the increase in gold prices, hitting a record high on Monday. However, by Wednesday, international copper prices surged and then fell, marking the largest single-day drop this year. The benchmark copper futures on the London Metal Exchange (LME) fell by 3.8% to $10,412.50 per ton, with an intraday low of $10,410.
Under the hawkish comments from Federal Reserve officials, metal prices were under comprehensive pressure, and copper prices are expected to oscillate at high levels in the short term. Citibank predicts that prices will consolidate over the next three to six months. However, based on the long-term fundamental analysis of the industry, copper prices are still bullish.
Copper is widely used in clean energy industries such as solar panels, wind turbines, and electric vehicles, and the supply gap for copper is expected to reach 10 million tons by 2030. Additionally, by 2050, the demand for copper in the transportation sector is expected to increase by 11.1 times, and the copper demand for the electrical grid will be 4.8 times higher than in 2022. As clean energy rapidly develops, the mining and expansion of copper mines become particularly crucial.
In the “METALS 100” interview in March 2024, Craig McMillan, the Chief Financial Officer of Horizon Copper Corp. (TSXV: HCU), the timeline of Oyu Tolgoi project, and share his thoughts on the copper market. The premier copper company holding a portfolio of unparalleled copper assets including a 30% interest in the copper-gold Hod Maden project, exposure to the Oyu Tolgoi copper mine through a 25% equity ownership in Entrée Resources Ltd., and a 1.66% net profits interest on the Antamina copper mine.
The latest report from the International Energy Forum (IEF) indicates that to meet the requirements of electrification, the world will need 35 to 194 new copper mines by 2050. The IEF explains that electric vehicles use about 60 kilograms of copper, which is more than twice the 24 kilograms used by traditional internal combustion engine vehicles. However, the copper required now for electric vehicles and grid upgrades far exceeds current production, and the progress in mining copper is not fast enough.
In addition to the green energy transition, other driving forces behind the bullish copper prices include AI data centers and military demands.
