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Base Metals
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General Market Commentary
Topics:
General Base Metals
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General Market Commentary
Renewable energy to drive copper demand, BMO says
Renewable energy will be the largest single driver of demand growth for copper over the coming years, according to a recent study by BMO Capital Markets.
“The need to connect significant numbers of small-scale electricity generation units into the grid provides a major boost to copper, with solar generation capacity set to triple and wind capacity set to double by 2025.”
Currently, global copper demand is about 30 million tonnes per year. BMO forecasts copper demand growth rates through 2030 will be above a compound annual growth rate (CAGR) of 3%, “marking an acceleration on the growth rates seen over the past twenty years.”
As a result, BMO has added 1 million tonnes a year of global copper consumption through 2025, compared with its earlier estimates.
“We see the need for ~ 5 million tonnes per year of new projects from new primary mine supply to solve the expected supply gap and bring the market into equilibrium over the 2025-2030 period.”
BMO has raised its long-run copper price to US$3.25 per lb. (US$7,165 per tonne).
“Changing long-run commodity prices should be a rare event, and should only take place where there is a market shift in the future outlook,” the study reported. “In our view, that event is the step-change we expect in demand expectations driven by renewables and electric vehicles.”