Solar energy, wind, electric vehicles, any other form of renewable energy needs it
Copper is a leading barometer of global economic health due to its wide use, such as in electrical equipment and industrial machinery and, as such, an indicator of growth and development when highly sought after.
The price of the commodity had a good start to the year, as Money.it explains, given the weakening of the dollar and investors’ expectations for an increase in demand after the reopening of the Chinese economy.
Short-term supply problems have also emerged, with protests erupting in Peru, which accounts for 10% of the world’s copper supply, exacerbating estimates of a supply shortage. Not only that, copper is set to experience a generational shift in demand as decarbonisation increases.
Although a Chinese reopening and a recovery in demand while copper inventories are near cyclical lows will likely lead to higher prices in the near term, portfolio manager Al Chu has suggested that the most attractive aspect in copper’s outlook is a “ secular change” long-term and related to your request.
Copper is typically used as a construction metal for building wiring, machinery and more, but if we look at the net zero energy transition trend of decarbonization, copper is the new oil, said the expert.
The point is simple: solar energy, wind, electric vehicles, any other form of renewable energy basically needs copper, because if you talk about electrifying something and transmitting electricity you need copper. Chu also highlighted a decline in the amount of metal available over the past 20 years, as well as the lengthy time it takes to activate major mining projects.
In fact, many reserves and deposits of the material are located in difficult places – Congo, Inner Mongolia – or in underdeveloped regions where it is not easy to build a mega-mine, he explained.