On July 31 (Thursday), driven by billions of dollars in global investments aimed at modernizing and expanding power grids to meet the substantial electricity demand required by the digital and clean energy revolution, the growth rate of copper demand has exceeded industry expectations.
Meanwhile, supply from major producing countries, including Chile and the DRC, has been constrained by insufficient investment in new mines, which will keep prices elevated for an extended period.
Some analysts predict that copper prices will reach a record high above $12,000 per ton by the end of this decade, a 23% increase from the current price level of around $9,700 per ton.
Consumers are seeking substitutes, but copper's superior conductivity, durability, and multipurpose nature make it difficult to replace.
According to the International Energy Agency (IEA), power grid investments alone are expected to exceed $400 billion this year, after reaching a record high of $390 billion in 2024.
Michael Finch, Head of Strategic Initiatives at Benchmark Mineral Intelligence (BMI), said, "The role of copper in power grid infrastructure is often severely underestimated. People recognize the need to expand power grids, but they often miscalculate the total amount of copper required for this initiative."
BMI's latest forecast indicates that global copper demand for upgrading electricity production and transmission networks will increase from 12.52 million tons this year to 14.87 million tons by 2030.
Data Centers and EVs Drive Power Grid Demand
Michael Widmer, an analyst at Bank of America, predicts that global copper demand will increase by 10% to 30.32 million tons by 2030 compared to this year.
Widmer forecasts that the global copper market shortage will reach 1.84 million tons by 2030.
In regions where the number of data centers is rapidly increasing to power artificial intelligence and machine learning, the need for resilient power grids is particularly urgent.
Peter Charland, Global Head of Information and Communications Technology at AECOM, a global infrastructure consulting firm, said, "Data centers for artificial intelligence and machine learning require larger, better, and more efficient computing capabilities," which means more electricity is needed.
Electric vehicles (EVs) also require significantly more copper than traditional internal combustion engine vehicles.
BMI predicts that copper demand from the EV sector will jump to 2.2 million tons by 2030, up from 1.2 million tons in 2025 and 204,000 tons in 2020.
Maria Cristina Bifulco, Chief Investor Relations and Sustainability Officer at Prysmian Group, the world's largest copper buyer and an Italian cable producer, said, "We are transitioning from cyclical to more structural copper demand."
Prysmian's procurement volume accounts for 2%-3% of global copper cathode production.
The impending shortages and record-high prices of aluminum semis and fiber-optic cabling solutions
have spurred a wave of innovation in related industries (such as construction and manufacturing), including measures like substitution and resource recycling, as copper costs account for a significant proportion of total production costs in these industries.
Although aluminum has long been considered a cheaper alternative material, priced at about one-third of copper, its application in data center cabling has been largely abandoned.
"There was a time when copper supply was in shortage, so people used aluminum cables and coated them with copper," said Charland from AECOM.
He added, "Given the performance issues at that time, this situation lasted only a very short while."
Recycling contributes to achieving sustainable development goals, as the energy consumption required to extract refined copper or secondary copper from scrap is 65% less than that of direct primary production.
In the field of data transmission, copper has gradually been replaced by fiber-optic cables. Fiber-optic cables offer higher bandwidth and efficiency, and their material is essentially glass made from silicon in sand.
"The cost of producing glass is much lower than that of mining copper," said Matt Miller, head of AECOM's Global Networks Division.
"Silicon reserves are extremely abundant, and you can even pick up as much silicon as you want from the beach."
However, analysts say that currently, these solutions are unlikely to alleviate copper supply shortages in the short term, especially for large-scale structural engineering projects that are crucial to the government's future economic growth prospects.
(Wenhua Integrated)
