How much is the demand for copper in emerging fields? [SMM South China Annual meeting]

"SMM South China Annual meeting | an in-depth Analysis of the Global economy, Copper, Aluminum and Zinc fundamentals and Price trend in 2022

At the 2021SMM South China Nonferrous Metals Industry Annual meeting held by SMM, Qiu Zuxue, General Manager of Investment products Center / Chief analyst of Metals and New Materials of Societe Generale Securities Institute of Economics and Finance, analyzed the demand for copper in emerging areas. He said that driven by electric vehicles and photovoltaic wind power, the demand for emerging applications is breaking out: according to Societe Generale Securities, the global demand for copper for new energy vehicles, domestic charging piles and domestic wind photovoltaic is 41, 1 and 1.14 million tons respectively in 2021, while from 2021 to 2023, the demand for copper in emerging fields is 156,178 and 2.04 million tons respectively. It is estimated that the proportion of total copper demand is 6.44%, 7.15% and 7.92%, respectively.

Emerging areas of copper demand: emerging areas break the tight balance between supply and demand for copper

Driven by electric vehicles and photovoltaic wind power, the demand for emerging applications is breaking out: according to Societe Generale Securities, the global demand for copper for new energy vehicles, domestic charging piles and domestic wind photovoltaic is 41, 1 and 1.14 million tons respectively in 2021; from 2021 to 2023, the demand for copper in emerging fields is 156,178 and 2.04 million tons respectively. It is estimated that the proportion of total copper demand is 6.44%, 7.15% and 7.92%, respectively. According to the estimation of Societe Generale Securities, the gap between supply and demand of 2021 may be 240000 tons. The global refined copper supply is short of 24 and 130000 tons respectively from 2021 to 2022, and the global copper concentrate is in short supply from 2021 to 2022. Recommended targets: Zijin Mining and Western Mining. But at the same time, risks suggest that metal prices have fallen sharply, epidemic control has failed to meet expectations, terminal demand is lower than expected, and global deflation expectations have intensified.

Compared with the traditional cable, fuel vehicle, air conditioning, real estate and other fields, the emerging application fields, such as new energy vehicles, charging piles, photovoltaic wind power and so on, have entered a period of rapid development with the stricter environmental protection and policy promotion, driving up the demand for copper. According to our estimates, in 2021, the global demand for copper for new energy vehicles, domestic charging piles and domestic wind power photovoltaic is 41, 1 and 1.14 million tons respectively, while from 2021 to 2023, the demand for copper in emerging fields is 156,178 and 2.04 million tons respectively. With the encouragement of relevant national policies, the new energy vehicle industry will continue to develop rapidly.

On the demand side, the demand for copper driven by new energy vehicles + charging piles + wind photovoltaic is obvious, and the mismatch between supply and demand may intensify. According to our estimates, from 2021 to 2023, the demand for copper in emerging sectors will be 160,181 and 2.08 million tons respectively; by 2030, the demand for copper in emerging sectors will increase to 5.01 million tons, while the new supply will be limited by capital expenditure, which peaked in 2013-2014. Copper in emerging sectors further tightens the supply and demand structure of copper.

Many European countries have introduced policies related to new energy vehicles to stimulate the consumption of new energy vehicles, and the overseas market has great potential. Britain, Germany, France, the Netherlands and Greece have successively issued a series of policies on subsidies for the purchase of new energy vehicles and the construction of supporting charging facilities, which have effectively stimulated the growth of sales of new energy vehicles. According to EV sales statistics, the total global sales of new energy passenger vehicles reached 685881 in September, an increase of 98.5 percent over the same period last year, an increase of 32.8 percent over the previous month, and a market share of 10.2 percent, exceeding 10 points for the first time. From January to September, global sales of new energy vehicles exceeded 4.25 million, accounting for 7 per cent of the global car market. Judging from the current trend, the annual sales of new energy vehicles are expected to exceed 6 million.

Copper is conductive and is needed for batteries, frequency converters, copper rotors for motors, as well as wiring and charging facilities for electric vehicles, according to the International Copper Association ((ICA)). The greater the dependence on electricity, the more copper is needed. According to the International Copper Association, the copper content of cars with internal combustion engines, hybrid, plug-in and pure electricity is about 23, 39, 60 and 83kg respectively. New energy vehicles consume more copper than traditional internal combustion engine vehicles, mainly due to the increase in the amount of copper used in batteries, frequency converters, motors and high-voltage wire harness, as well as low-voltage wire harness.

In 2023, the global demand for copper for pure electricity and plug-in mixtures is expected to be 46cm, 59 / 800000 tons, respectively, an increase of 111%, 29% and 34%, respectively, compared with the same period last year. According to EVTank's forecast, from 2021 to 2023, the total sales of pure electricity and plug-in in China will be 280,379 and 4.9 million respectively, while those in Europe will be 194,247 and 3.28 million respectively. The total global sales of pure electricity and plug-in mix are 602,774 and 10.34 million respectively. According to DBS data, the copper content of pure electricity and plug-in bicycle belt is 83kg and 60kg respectively, so the global demand for pure electricity and plug-in copper in 2023 will be 46shock 59 / 800000 tons respectively, an increase of 111%, 29% and 34% respectively over the same period last year.

It is estimated that the CAGR of fast charge and slow charge will be 21% and 56.8% respectively from 2020 to 2025. In 2020, the number of domestic rechargeable piles is 1.672 million, of which 798000 are public piles and 874000 are private piles. It is assumed that all private piles are AC piles. At the same time, according to the data of the charging Alliance, exchanges account for 61.68% of public piles in 2020, so the number of AC piles and DC piles in China in 2020 is about 1.372 million and 309000 respectively. According to the "Roadmap of Energy Saving and New Energy vehicle Technology 2.0", 2025Universe 2030Universe 2035, the ports of slow charge facilities are more than 1300pm 7000 / 150 million, and the public fast charge ports are about 80max 128 / 1.46 million, respectively; then from 2020 to 2025, the CAGR of fast charge and slow charge is 21% and 56.8%, respectively, and the CAGR of fast charge and slow charge is 9.9% and 40.0%, respectively, and between 2025 and 2030, the CAGR of fast charge and slow charge is 9.9% and 40.0%, respectively, and the CAGR of fast charge and slow charge is 21% and 56.8%, respectively. From 2030 to 2035, the CAGR of fast charge and slow charge were 2.7% and 16.5%, respectively.

The main copper components of charging pile are cable, charging module and so on. The charging pile is mainly composed of pile body (shell, man-machine interface), electrical module (contactor, control guide circuit, charging socket, cable transfer terminal strip, safety protection device, etc.) and metering module. The main copper components of the charging pile are cables, transformers and so on. The copper consumption of DC pile and AC pile is 70kg/ and 4kg/ respectively, and the main differences are as follows: 1) the voltage of DC pile is larger, the copper consumption of output cable is larger, and the charging line of DC pile is 9-wire plug. The voltage of AC pile is generally at 220V-380V and the power is about 3.3kwMur24kW, while the voltage of DC pile is generally at 450V-750V and the power is about 24kw. 5kw-120kw . From the point of view of the charging circuit, the DC pile is a 9-wire plug, while the AC pile is a 7-wire plug. 2) there are components such as AC-DC charging module for AC to DC in the DC pile, and the higher the power, the more the number of modules.

It is estimated that in 2021, the demand for copper for new charging piles in China will be about 10900 tons. Based on the following assumptions: 1) by 2025, the slow / fast charge will reach 1300 and 800000, and by 2030, the slow / fast charge will reach 7000 and 1.28 million; 2) the charging pile will have the same growth rate from 2025 to 2030; 3) the DC pile (fast charge) consumes copper 70kg/, and the AC pile (slow charge) consumes copper 4kg/. It is estimated that the demand for copper for new charging piles in China will be 1.09,1.45 and 17000 tons respectively in 2023.

Similarly, because of its good conductivity, copper is mainly used in renewable energy electrical components, such as turbines, generators, transformers, inverters, cables, power electronics and information cables.

In the field of wind power: according to Wood Mackenzie, in offshore wind power, the amount of copper used in cables, generators, transformers and substations is about 63%, 21%, 9% and 7%, respectively; in onshore wind power, the amount of copper used in cables, generators, transformers and substations is about 64%, 7%, 19% and 9%, respectively.

Photovoltaic field: the copper used in photovoltaic mainly lies in transformers, inverters, cables and connecting welding strips. Among them, photovoltaic welding tape is an important part of photovoltaic modules, which is an electrical connection component, which is used in series or parallel photovoltaic cells to play an important role of conductive accumulation to improve the output voltage and power of photovoltaic modules. The photovoltaic welding strip is composed of a substrate and a surface coating, in which the substrate is copper of different sizes.

In addition, it is estimated that the average annual copper consumption of wind power photovoltaic will be more than 400000 tons from 2021 to 2025. According to the National Copper Association, the average amount of copper used in renewable energy systems is more than 8-12 times that of traditional power generation systems, of which wind turbines use about 2.5-6 tons of copper per megawatt (assuming 4.25 tons) and solar photovoltaic power generation uses about 4 tons of copper per megawatt. With the promotion of the non-fossil energy share target, according to Xingzheng Power's new team, assuming that the proportion of non-fossil energy will reach 20% in 2025, 30% in 2035 and 2025-2030, the average annual copper consumption of wind power photovoltaic will be more than 400000 tons and 720000 tons respectively.

According to the estimation of Societe Generale Securities, the gap between supply and demand of 2021 may be 240000 tons. It is estimated that the global refined copper supply is short of 24 and 130000 tons respectively from 2021 to 2022, and the global copper concentrate is in short supply from 2021 to 2022.