The demand for copper from the energy transition is set to shake up the industrial commodities market, with experts predicting that the red metal may soon diverge from other economic bellwethers like aluminum and zinc.
Eric Saderholm, managing director of American Pacific Mining Corp., highlighted copper’s essential role in electrification as a key factor in its potential separation from other industrial metals. He emphasized that without copper, global industrialization would come to a standstill.
While copper, aluminum, and zinc have historically followed similar price trends, the looming supply shortage in copper is expected to shift its status as an economic indicator. Saderholm explained that a deficit of 1.3 million metric tons is projected by 2027 due to the electrification requirements of the energy transition.
By 2031, the world is anticipated to need 36.6 million metric tons of copper for electrification, but supply sources are only projected to provide 30.1 million metric tons, leaving a significant shortfall. This growing disparity between demand and supply could lead to a fundamental shift in how copper is perceived in the market.
Saderholm envisions a future where copper establishes itself as a separate market, distinct from other industrial metals like aluminum and zinc. This evolution would likely prompt investors and traders to approach copper with a unique investment philosophy, setting its own trend independent of other indicators.
As the world braces for a potential copper shortage in the coming years, the red metal’s journey towards becoming a standalone market is poised to reshape the dynamics of the global commodities sector.
