Copper Market Faces Pressure Amid Growing Demand and Global Challenges

The global copper market faces several pressures as demand continues to rise. The mining, smelting, and refining sectors have surpassed expectations in 2024, according to the International Copper Study Group (ICSG) based in Lisbon. This growth highlights the need for more copper supply as the world moves toward a more electrified future.

Copper Production and Demand Growth in 2024

The ICSG’s annual report shows that copper mine production grew by 2.3% in 2024. Refined copper production also increased by 4.2%. This growth in copper production underscores the rising demand for the metal. Additionally, copper recyclers raised global output by 2.0%. Rising demand from sectors like energy transition and data centers is a key driver behind this growth.

Recyclers and secondary producers are playing an important role. They are increasing the availability of recycled copper, which is a key component in the supply chain. By the end of 2024, the global inventory of refined copper reached 1.54 million metric tons, up 29.5% from 1.19 million metric tons in 2023.

Challenges and Opportunities in Copper Supply

However, McKinsey & Co. points out potential challenges ahead. They predict a large gap in copper supply by 2035, requiring $400 billion in capital expenditures to address it. This gap could be critical, as demand outpaces supply.

McKinsey also sees recycling as a significant opportunity. Traders are investing more in copper recycling and secondary processing. This can help meet the increasing needs of energy transition and data centers.

Impact of Trade and Economic Uncertainty on Copper Prices

Trade issues and economic uncertainty are complicating the copper market further. Recently, the United States reintroduced and then partially withdrew tariffs on copper imports. This has caused unpredictability in the market. Prices have been volatile, especially with a widening gap between the U.S.-based Comex exchange and the London Metal Exchange (LME).

John Gross, an analyst at The Copper Journal, notes that the market is dealing with heightened uncertainty. “Markets don’t like uncertainty, but we’ve reached a new level of unpredictability,” Gross commented. This unpredictability has left investors worried about ongoing fluctuations in copper prices. In February 2024, copper prices on Comex averaged $4.55 per pound, while LME cash prices were $4.23, showing a significant premium for Comex copper.

The Future of Copper

Looking ahead, the copper market will face continued pressure. While demand is expected to stay strong, challenges like trade disruptions and supply chain issues could affect the market. Copper’s role in the energy transition and technology ensures its importance, but the industry must adapt to these shifting dynamics.