Some institutions predict that within ten years, the world may face a large-scale shortage of copper, a crucial metal for the global economy.
According to CRU Group, a commodity market research firm, with the booming development of clean energy and transportation industries, the copper industry needs to invest over $100 billion to fill the annual supply gap of 4.7 million tons by 2030.
According to commodity trader Trafigura Group, if no new mines are built, the potential copper shortfall could reach 10 million tons. To narrow this gap, it is necessary to build production capacity equivalent to 8 Escondida copper mines. The copper mine is located in Chile and is the world's largest copper mine, belonging to the BHP Group.
Copper has a wide range of uses, from wires and pipelines to batteries and motors. It is not only an economic indicator, but also a key component in promoting the development of renewable energy and electric vehicles. If producers cannot solve the supply problem, copper prices will continue to rise, posing a challenge to the Biden administration and other world leaders who rely on global energy transition to address climate change.
On the other hand, the rise in copper prices may lead to more recycling of scrap copper and the use of cheaper alternatives such as aluminum, which may alleviate shortages. Since February this year, LME copper futures prices have skyrocketed and broken through the $9500 mark, currently consolidating around $9000.
Goldman Sachs previously raised its 12-month target price for copper to $10500 and pointed out that "copper supply is currently in its most tight phase," with the bank expecting the largest supply shortage in a decade.
We are about to face the biggest shortage of copper in 10 years. At the beginning of this year, inventory was at a very low starting point, but so far, the anti seasonal inventory in the first quarter has further deteriorated, and its scale has only been seen once in recent history (in 2004), "said Nicholas Snowden, an analyst at the bank, in a report." These trends indicate that the risk of copper shortage is high in the coming months. Against this backdrop, the fundamental outlook for copper remains very optimistic, and there is no evidence to suggest that the current price level has a weakening trend
It can be confirmed that a new copper mine project is being prepared. But copper producers are also concerned about repeating the same mistake, that is, the significant fluctuations in copper prices may bring potential losses. Another analyst pointed out that "the increasing technological complexity and approval delays may lead to a shortage of projects that can be started between 2025 and 2030
