Insufficient mine investment could drive sustained shortages and copper price volatility, according to Wood Mackenzie.
Global copper demand is set to surge 24 per cent by 2035, rising by 8.2 million tonnes per annum (Mtpa) to 42.7 Mtpa, the research and consulting firm said in its new Horizons report, ‘High-wire act: Is soaring copper demand an obstacle to future growth?’
Growth will be driven by traditional economic development alongside new structural demand from electrification and digitalisation.
While this growth trajectory seems certain, Wood Mackenzie said that four powerful disruptors could amplify demand and price volatility beyond expectations. Together, these disruptors could add an extra 3Mtpa, or 40 per cent of total copper demand growth, by 2035.
Data centres emerge as volatility wild card
Among these disruptors, data centres represent the most unpredictable variable in copper demand forecasting. Artificial intelligence (AI) is set to consume an additional 2200 terawatt-hours (TWh) of electricity by 2035, according to global data centre projects tracked by Wood Mackenzie’s Power team. This will lift copper demand for grid infrastructure alone to 1.1Mtpa by 2030.
The report noted that as copper represents less than 0.5 per cent of total project costs, data centre developers remain largely indifferent to its price movement. A sudden surge in construction could therefore trigger price spikes of 15 per cent or more, rapidly depleting inventories and intensifying volatility.
“Data centres create inelastic demand in the market,” Wood Mackenzie’s Peter Schmitz said. “When developers require copper for the expansion of data centres, how it is used will be of little concern for the copper price. This dynamic in a nascent sector makes data centres an unpredictable and volatile source of demand this decade.”
To read the full article, visit the Wood Mackenzie website.
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