Tianyu He, Copper Analyst CRU Group: “By 2040, Chinese copper consumption will be 2.5Mt higher thanks to green demand”

According to CRU estimates, while in 2020 the use of copper for green applications was equivalent to 5% of consumption, it is projected that for two more decades, this percentage will reach 15% of the country’s total consumption.

The green revolution that world economies are experiencing today will be key for the demand for the red metal to remain on the rise, a situation that especially benefits Chile, the world’s leading copper producer.

Attention is focused on how the supply and demand of this mineral will develop, which between January and November 2021 has maintained an average price above US $ 4.21 per pound, according to Cochilco data.

“The growth of renewables and electromobility will benefit copper demand in 2022,” says CRU Group copper analyst Tianyu He. “As more countries and companies pledge to reach carbon neutrality, that will be a real boost for copper demand from green applications.”

-How is the impact of the economic performance of the United States and China projected on the copper market?

The US and China are the two key markets for global copper demand and sentiment.

Over the past two years, supportive monetary and fiscal policies in the United States have led to higher demand and copper prices. The high price of copper has been an issue for Chinese semi-finished products producers, China is a major exporter of these products. As a result, China has introduced a series of policies to limit speculation in commodities prices and there has also been releases of strategic copper inventories.

As mentioned earlier, the path of economic growth in 2022 in these two key economies will have a large impact on the copper price.

-How China’s Five-Year Growth Plan will boost copper demand?

The biggest highlight of China’s five-year plan in the copper industry is the strong support for the development of renewable energy and the green economy.

According to our calculations new energy vehicles, renewable energy and related infrastructure will continue to support China’s copper consumption in the next 20-30 years. In previous models, we expected China’s copper consumption to peak and begin to decline from 2025 onwards. But thanks to the support of green consumption, the demand peak will be postponed to after 2030, while the degree of decline will be significantly slower. By 2040, Chinese copper consumption will be 2.5Mt higher than if we excluded the green demand.

At the same time, in 2020, copper consumption in green applications accounts for less than 5% of Chinese copper consumption, and by 2040, this proportion of consumption will reach around 15%.

-How is the copper supply projected?

Some key projects are in development this year and next. Kamoa Kakula is ramping up in DR Congo and is ahead of schedule. Anglo America will also start production at Quellaveco mine in Peru, which will produce 300,000 tonnes of copper. Along with Teck’s Quebrada Blanca Phase 2, these are the mine project start-ups that the market will be watching closely.