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Will Copper Prices go further up in 2021-22 financial year?

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by - 3/8/2021 919 Views

As the economic level progress further, the necessity for ‘the red metal’ increases rapidly. Will it raise further in coming financial year

 

 

Why is Copper in High Demand?

Copper trades at all time high breaking all records in the first quarter of 2021. Will the prices come down or is it poised to raise further?

While I write this article  copper is trading at 

MCX(India) Copper Prices:  684 INR/KG (Month High)

SHME(China) Copper Prices: 65630 Yuan/Ton

COMEX(US) Copper Prices: 4.1170 USD/lbs

LME Copper Cash: 9021 USD/Ton

And Copper Scrap rates also hit higher rates.

New Delhi Scrap Copper Price(No#1): 624 INR/KG

US Yard Buying rates for copper Scrap: 3.5 USD/lbs

Canada Yard buying rates for #1 copper scrap: 4 CAD/lbs

Australian Yard buying rates for Copper Scrap: 8 AUD/KG

               At present, the demand for copper is increasing. Numerous enduring developments are currently advancing the growth of copper. This includes increased electronics usage, extensive approval of electric vehicles (EVs), enlarged use of renewable energy sources, and energy efficiency. Among all the metals utilized in power generation, transmission, storage, and consumption, copper remains the mutual denominator. So copper is in great demand for its usage. As the economic level progress further, the necessity for ‘the red metal’ increases rapidly. Here are a few causes why copper is in high requirement.

In Electric Vehicles

Many countries worldwide have set a timeline that all the vehicles have to be electrified because Electric vehicles use about four times more copper than petrol and diesel vehicles.

In an electric vehicle, copper is used because of its high electrical conductivity, durability and malleability. Copper is used in every major EV component, from the motor to the inverter and the electrical wiring. And a fully electric vehicle can use up to a mile of copper wiring.

According to a report commissioned by the International Copper Association (ICA), the number of roadworthy electric and hybrid vehicles is expected to reach 27 million by 2027. The battery-powered vehicles require approximately 60kg copper.

According to the CRU analyst, it is expected that the copper demand from the electric vehicle sector to rise to nearly 1.5 million tons in 2025 and to 3.3 million tons by 2030.
On average, a battery-electric vehicle (BEV) contains about 83 kg of copper, and a plug-in hybrid electric vehicle (PHEV) contains about 60 kg.

In Architecture

Architects are turning to copper components to decrease the environmental impact of new buildings. In North America, copper has even been used to clad, adorn and embellish buildings to aid durability and sustainability. Copper’s corrosion-resistant properties can even help these buildings withstand damage from extreme weather conditions.

Copper is highly used in the construction industry. Copper-stranded wires are used for electric supply and can be mounted at both the residential and industrial levels.According to a study by the Institution of Civil Engineers (ICE), the global construction industry is expected to reach USD 8 trillion by 2030, primarily driven by China, India, and the United States region.

Globally, Asia-Pacific has the largest construction market, led by India, China, and various South-east Asian countries. In India, the government has initiated projects such as 100 smart cities and 'Housing for All by 2022', which are expected to drive India's residential construction market through the forecast period.

In the construction industry, infrastructure is the major contributor to the market demand for copper-stranded wires. Increasing investment in infrastructure construction in the Middle East & Africa is expected to boost copper-stranded wires' demand.

In Renewable Energy and Solar Energy

Solar and wind energy are being emphasized as an alternative source of energy worldwide. The world is adopting renewable sources of energy at a rapid speed. The renewable energy source will accelerate the copper demand in the coming years. According to the CRU analyst, it is expected that the renewable energy sector could see copper demand rise from around 650,000 tons in 2020 to over 1.3 million tons in 2030. Expectations are for global copper demand to rise to more than 26 million tons in 2025 from around 23 million tons this year. Much of that growth will come from renewable energy and electric vehicles. As the demand for renewable energy grows, so does the demand for copper.

Health Sources

Research has shown that the novel coronavirus, responsible for the COVID-19 pandemic, can survive for days on glass, plastic, and stainless steel surfaces but dies within an hour on a copper surface. Copper has antimicrobial properties that are effective against a wide variety of disease-causing organisms. Copper is antimicrobial by nature, making it an ideal choice of material for use in public areas such as hospitals, schools, gyms would definitely protect the individual from viral infection. In fact, Bloomberg Markets believes public health applications may see the surge in demand for copper by as much as 1 million tons per year over the next 20 years.

How Do We Ensure Adequate Supplies of Copper for the Future?

Huge Amount of Copper Reserves is Available.

Currently, global copper reserves are estimated at more than 830 million tons, and the annual copper demand is 28 million tons. In addition to the known reserves, it is worth noting that 35 percent of the demand is met with recycled copper, significantly reducing the need for mined copper.

There is an adequate amount of copper to encounter existing and future requests. To help predict where the copper resources are located, USGS scientists have studied the copper resources in the Earth's crust. They used that information to evaluate the potential for undiscovered copper resources. These techniques were developed and refined by the USGS to evaluate the mineral resource availability globally. Precisely, the USGS established that around 350 million tons of copper had been discovered and assessed that 290 million tons of copper stayed undiscovered in the United States. So it is undoubtedly foretold that there won't be any shortage of copper in the future.

What is Pushing up the Prices?

The High price of copper suggests that the economy is doing well.

Last year, the Corona epidemic caused a worldwide lockdown. Due to this, all economic activities were badly affected. After unlocking begins, the business activates gradually, and the demand for copper from factories increased. Copper prices dropped to significant lows of up to $4774 per ton in March 2020 when the Corona-virus spread globally. Closed borders and trade have an overall drop in industrial and construction activity globally led to this drop. However, as the world heals from the pandemic, copper prices are on the rise again. Here are a few causes why copper is at a high peak currently. They are mentioned below.

China’s Aggressive Buying led to increase of Copper Prices.

Like China, the topmost copper purchaser is getting back to this business after a long break; it implies that copper's demand would increase further. China has a big role in increasing the price of copper. In the first quarter of 2020, prices started falling as its demand from its main consumer China and other countries fell by 15 percent due to Covid – 19 Lockdown worldwide. However, in July 2020, China started buying, and on an annual basis, 38 percent more copper was imported.

Copper is Strengthened by its Usage

The well-being of the global economy basically indicates the price of copper. This happens because of the extensive usage of copper in all sectors of the economy. Apart from China's part and vaccination initiatives worldwide, numerous administrations’ decarbonization efforts to diminish reliance on fossil fuels also added copper demand. Besides, administrations focus on building renewable energy and electric vehicle infrastructure to lift the demand for copper. 

The Current Rate of Copper

The Copper futures are widely traded on the London Metal Exchange (LME), at the COMEX and the Multi-Commodity Exchange in India. Presently, the copper prices have touched an almost 10-year high. The demand for copper is estimated to increase further with an assurance of a stronger global economic recovery because of COVID-19 vaccine roll-outs. According to the LME records, the copper rate raised around $9,654 per metric ton at the end of February, for the first time in nine years. The present copper rate is $ 9,021 per metric ton in the LME market. However, there was a slight fall in the price, and it is estimated that the price of copper will be manageable in the coming years.

Will copper prices raise in 2021-22 Fiscal

“The reasonable trading range next year will be between $6,500 and $7,000 a tonne,” said Kojima of PPC Japan in Dec 2020. But copper rates are way beyond that. In future, it is estimated that the global copper price will be rising due to copper's obligatory role in modern technologies. The high demand for copper identifies that the global economy is constant. The economy affected by the Corona epidemic is now slowly gaining, and China is making aggressive purchases. The demand for copper is continuously increasing, and there is an adequate amount of copper to meet these requirements. As the demand is high, its price will also climb up without falling low. Therefore the copper price is determined to be moderately Increasing in the next fiscal.

 

 

Category : Copper

Tags : Copper, Copper's Demand, Price of Copper


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About Jenisha Rajakumar

I'M a Research Analyst and Content Creator at RIM. Currently I'm researching on Copper Prices around the Globe and the impacts on Copper Scrap Prices with regard to COMEX, LME, SHFE and .... more info

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