• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Skip to footer

Fat Tail Daily

Investment Ideas From the Edge of the Bell Curve

  • Menu
    • Commodities
      • Resources and Mining
      • Copper
      • Gold
      • Iron Ore
      • Lithium
      • Silver
      • Graphite
      • Rare Earths
    • Technology
      • AI
      • Bitcoin
      • Cryptocurrency
      • Energy
      • Financial Technology
      • Bio Technology
    • Market Analysis
      • Latest ASX News
      • Dividend Shares
      • ETFs
      • Stocks and Bonds
    • Macro
      • Australian Economy
      • Central Banks
      • World Markets
    • Small Caps
    • More
      • Investment Guides
      • Premium Research
      • Editors
      • About
      • Contact Us
  • Latest
  • Fat Tail Series
  • About Us
Macro Central Banks

Copper Rush: China’s Unprecedented Demand Boosted Copper Prices

Like 0

By Selva Freigedo, Friday, 14 May 2021

China went on a massive construction spree. China needed buildings to house people, they needed to build transport, infrastructure…and lots of copper for it...

In the early 2000s, China went through a major urbanisation process.

People were moving from the countryside into the cities and China went on a massive construction spree. China needed buildings to house people, they needed to build transport, infrastructure…and lots of copper for it.

Copper is versatile. It can conduct heat and electricity, so it’s in a lot of things we use today. It’s in pipes and wires in buildings, in cars, in appliances, etc.

China’s Unprecedented Demand Boosted Copper Prices

Prices hit close to US$9,000 a tonne in early 2008…and then collapsed later that year during the crisis. A few years later, the market had recovered, with prices hitting just over US$10,100 a tonne in 2011, an all-time record high.

Copper became so valuable that people stole it from homes, cell towers, or even the subway.

You see, copper can be recycled and reused. In fact, scrap copper makes up about a third of global copper supply at around 30 million tonnes.

But anyway, last week, copper prices beat that old 2011 all-time record high. According to the London Metal Exchange (LME), copper passed its previous record of US$10,190 per tonne from 2011 to reach US$10,761.

Three Ways to Invest in the Renewable Energy Boom

It’s been a pretty quick race to the top too. Only a year ago copper was trading at around half of that.

I mean, demand is rising.

First, there is the recovery from the virus and the global economy restarting. There are some inflation pressures. But, there’s also the renewable energy transition.

Copper is used in solar panels, wind turbines, batteries, and also electric vehicles. An electric vehicle can have an average of up to 83kg of copper per car, compared to the 20kg of copper internal combustion engine (ICE) vehicles have. That’s four times the amount of copper needed per EV!

And then, of course, you need copper for charging all those EVs, so it is quite key in building EV infrastructure and fast chargers.

Countries around the world are setting some ambitious emission targets. China is looking at net zero by 2060. The EU, UK, South Korea, and Japan among others are targeting 2050.

The US has pledged a US$2 trillion infrastructure plan that includes renewable energy.

Reaching decarbonisation goals means more electrification, and for that, we will need more copper.

Demand for copper could only grow from here…and so could the price.

In a report last month, Goldman called copper ‘the new oil’ and expects the metal to hit US$15,000 a tonne as early as 2025. They see the renewable energy transition creating a long-term supply gap of 8.2 million tonnes by 2030. As they said, ‘the highest on record’ and ‘twice the size of the gap that triggered the bull market in copper in the early 2000s.’

As they continued:

‘Crucially, the copper market as it currently stands is not prepared for this demand environment. The market is already tight as pandemic stimulus (particularly in China) have supported a resurgence in demand, set against stagnant supply conditions. Moreover, a decade of poor returns and ESG concerns have curtailed investment in future supply growth, bringing the market the closest it’s ever been to peak supply.’

Copper prices are already starting to reflect that increase in demand, giving an incentive to get more miners into the game.

But of course, it takes time to start or expand new mines.

Global Copper Demand Forecast

Citi forecasts global demand for copper will grow 6.5% this year to 24.75 million tonnes, and that supply will fall short by 521,000 tonnes. They expect both mine supply and scrap metal recycling to increase, but don’t expect they will cover the shortfall, as they need time to build up.

And then of course, any other factors hitting supply could affect prices.

Take Chile, for example.

Chile is by far the largest copper producer in the world, with 28% of world’s copper supply followed by Peru. In 2019 the two countries produced 40% of the global mined copper.

Chile is discussing passing a reform that would impose a 3% royalty on metal production including metals such as copper and lithium. The royalty would increase as copper prices rise.

If the reform goes through, mining companies would lose over 20% of their gross revenue to this royalty at today’s prices, according to Mining.com. It would affect miners’ bottom line but could also deter new miners.

Bottom line: the future for copper is looking quite bright.

Best,

Selva Freigedo Signature

Selva Freigedo,
For Money Morning

PS: Promising Small-Cap Stocks: Market expert Ryan Clarkson-Ledward reveals why these four undervalued stocks could potentially soar in 2021. Click here to learn more.

All advice is general advice and has not taken into account your personal circumstances.

Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

Comments

Subscribe
Notify of
guest
guest
0 Comments
Inline Feedbacks
View all comments
Selva Freigedo

Selva’s Premium Subscriptions

Publication logo
Fat Tail Investment Research

Latest Articles

  • You Read it Here First: Great Asset Rotation Underway
    By James Cooper

    Media is swirling on the great asset transition taking place from the banks to the miners. But James Cooper made this prediction months ago in Mining Memo. Are you taking advantage?

  • The sector primed to fly into 2026
    By Callum Newman

    “So, what’s a good investment right now?”

  • OpenAI and Microsoft Divorce?: Why this could be good for you
    By Charlie Ormond

    While breakups are rarely pretty, this one might actually benefit investors willing to look beyond the drama.

Primary Sidebar

Latest Articles

  • You Read it Here First: Great Asset Rotation Underway
  • The sector primed to fly into 2026
  • OpenAI and Microsoft Divorce?: Why this could be good for you
  • Three Lithium Stocks in the Buy Zone
  • Every Australian Investor Has a Stake in Mining

Footer

Fat Tail Daily Logo
YouTube
Facebook
x (formally twitter)
LinkedIn

About

Investment ideas from the edge of the bell curve.

Go beyond conventional investing strategies with unique ideas and actionable opportunities. Our expert editors deliver conviction-led insights to guide your financial journey.

Quick Links

Subscribe

About

FAQ

Terms and Conditions

Financial Services Guide

Privacy Policy

Get in Touch

Contact Us

Email: support@fattail.com.au

Phone: 1300 667 481

All advice is general in nature and has not taken into account your personal circumstances. Please seek independent financial advice regarding your own situation, or if in doubt about the suitability of an investment.

The value of any investment and the income derived from it can go down as well as up. Never invest more than you can afford to lose and keep in mind the ultimate risk is that you can lose whatever you’ve invested. While useful for detecting patterns, the past is not a guide to future performance. Some figures contained in our reports are forecasts and may not be a reliable indicator of future results. Any actual or potential gains in these reports may not include taxes, brokerage commissions, or associated fees.

Fat Tail Logo

Fat Tail Daily is brought to you by the team at Fat Tail Investment Research

Copyright © 2025 Fat Tail Daily | ACN: 117 765 009 / ABN: 33 117 765 009 / ASFL: 323 988