Copper futures achieved a historic high on Wednesday, 15 May 2024, due to inflated demand driven mainly by the construction of electronic and electric infrastructure and equipment.
High Demand For Copper Sends Price Soaring
At one stage, copper reportedly traded at $5.02 per pound. This commodity’s price has increased by 25% this year.
Based on CNBC, copper underpins economic well-being and digitisation as it plays a pivotal role in energy transformation. Sectors involving the production of electric vehicles (EVs), power plants, and renewable energy solutions all depend on copper.
The Bank of America predicted the demand for copper in the EV market will jump by 5% this year. CNBC also pointed out that artificial intelligence (AI) creates the need for more data centres and quoted a note from the Bank of America, which stated:
With demand from EVs still growing, albeit a slower pace, the focus has shifted towards the copper needed in the data center build-out.
Due to a decrease in mined copper, the International Copper Study Group (ICSG) predicted a lower copper surplus for the year. In October 2023, this organisation forecasted a 3.7% copper production increase but has since adjusted this to 0.5%.
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CNBC reported that First Quantum Minerals (FM.TO) stopped production at Cobre Panamá after a court order and environmental protests. Anglo American (AAL.L) also indicated it will downsize copper production in 2024 and 2025. Citigroup Inc. (C) said in a report:
We see copper climbing to $10,500/t in the near-term as signs of expected physical tightening perpetuate the momentum of rally of recent months.
