Copper Outlook Threatened by Various Economic Risks: Experts
Copper is beset by various risks that threaten to undermine the prospects of the key metal needed to wean the world off fossil fuels, according to CRU Group’s Vanessa Davidson.
Threats include “the possibility of a decline in GDP or industrial production triggered by geopolitical risks, high inflation becoming more entrenched in the economy, or the effects of Covid-19 lasting longer than expected,” it said. CRU’s director of copper research and strategy said Monday at a mining conference in Toronto. Other near-term risks include slower-than-expected adoption of green technologies, greater availability of scrap metal as well as substitution and reduced use of industrial metal, she said.
Copper fell 2.3% on the London Metals Exchange on Monday, the most in a month, as commodities tumbled alongside U.S. stocks on growing fears that interest rate hikes by the Federal Reserve will plunge the economy into a recession. The red metal is down 4.4% this year after climbing more than 25% in each of the previous two years.
Still, Davidson said the long-term demand outlook for copper remains intact, driven by consumption in industries such as electric vehicles and clean energy technologies.
“The green energy story is expected to contribute significantly, adding an additional 2 million tonnes of copper demand by 2030,” Davidson said during his speech at the Prospectors & Developers Association of Canada mining conference. .
CRU’s latest forecast calls for global copper demand to grow 2.1% per year to 28.5 million metric tons by 2030, according to Davidson’s presentation. Use of copper from green energy is expected to account for 20% of total consumption by 2040, up from just 2% in 2015, she said.
“Without the demand from the green energy transition, global copper consumption will begin to plateau around 2027 at around 25 million tonnes,” Davidson said.
