While gold’s bullish run has attracted its fair share of attention over recent months, one analyst believes a less glamorous commodity could soon steal the show. Speaking to Bloomberg, Jeff Currie of Carlyle declared, “Copper is the new oil” and added, “I go back to the 2000s; I was bullish on oil then as I am on copper today.” 

Copper is finding a renewed lease of life as a key component of future technologies. Demand for metal in the AI, renewable, and defence sectors is surging while supply is squeezed. The result? Copper surged to its highest price in almost two years in April, with Citi forecasting copper to trade at $12,000 per metric ton in 2026. 

The value of copper is often associated with the health of the global economy. And with the world beginning to recover from the twin shocks of Covid and the war in Ukraine, some analysts believe the metal could be poised for an extended bull run. We explore whether there could be an opportunity in copper and if it really might be “the new oil.”

Why is the price of copper rising? 

Copper is as subject to the law of supply and demand as any other commodity – and right now, China is buying up vast quantities of the metal to help fuel its economic growth. Copper is needed to operate next-generation technologies, such as self-driving cars and artificial intelligence, and remains a key component in traditional manufacturing and construction settings. 

China has been credited with boosting the price of copper by 25 per cent in just six months, as it bought up large quantities of the metal in Q3 2023. Exacerbating the demand-side pressure is the difficulty in mining new sources of copper – a lengthy and challenging process. Some investors are now cashing in on predictions of an acute shortage down the road. 

As industry outlet Mining Weekly reported, speculation abounds over an expected tightening in the supply of copper, helping to fuel a bull market. It comes as smelters have cut their ore output due to what the outlet describes as a “series of setbacks in major mines.” Though they add that some industry experts have warned copper prices could be running away from their actual value.

In March this year, First Quantum’s Panama copper mine was ordered to close by the government. The mine reportedly accounted for a whopping 5 per cent of the nation’s GDP, with the IMF downgrading growth forecasts for the country as a result of the decision. But the mine isn’t only crucial to Panamanians, with knock-on effects set to hit the market hard. As ING reports: 

“The main catalyst for copper’s rally is the unexpected tightening in the global mine supply, most notably First Quantum’s mine in Panama, which has removed around 4,000,000 tonnes of the metal from the world’s annual supply. In addition, Anglo American said it was cutting output by 200,000 tonnes. And Codelco, the world’s biggest copper producer, is struggling to recover from the lowest output in a quarter of a century.”

What is copper mainly used for?

Copper has long been a linchpin in industrial applications due to its exceptional electrical and thermal conductivity, corrosion resistance, and malleability. From its traditional roles in construction and electrical infrastructure to its emerging significance in cutting-edge technologies such as artificial intelligence AI, EVs, and renewable energy systems, copper’s versatility continues to underpin its growing demand.

Traditional applications remain strong

In its traditional stronghold, copper remains indispensable. Electrical wiring and electronics benefit from copper’s superior conductivity, which is crucial for power generation, transmission, and distribution systems. The construction sector relies on copper for plumbing, roofing, and cladding, leveraging its durability and resistance to corrosion. Furthermore, the metal’s antimicrobial properties have found applications in medical equipment and hospital surfaces, underscoring its utility in maintaining sterile environments.

The rise of AI and electric vehicles

The proliferation of AI and machine learning technologies has significantly bolstered the demand for high-performance computing hardware, with copper playing a vital role. In data centres, copper is a critical component in heat sinks and cooling systems that manage the substantial heat generated by dense computing operations. Due to its excellent electrical properties, the wiring and internal components of servers and data storage systems also depend heavily on copper.

The electric vehicle (EV) industry is emerging as a major growth area for copper consumption. EVs require significantly more copper than traditional internal combustion engine vehicles, particularly in  electric motors, batteries, inverters, and wiring systems. Estimates suggest that an average EV contains up to four times as much copper as a conventional vehicle, primarily in its motor, battery pack, power electronics, and extensive cabling. Additionally, the infrastructure supporting EVs, such as charging stations, relies on copper for efficient energy transfer and connectivity.

Renewable energy technologies drive demand

Renewable energy technologies, including wind turbines, solar panels, and energy storage systems, are also substantial consumers of copper. Wind turbines use copper in their generators, transformers, and internal cabling, and offshore wind farms are especially reliant on copper’s efficiency and robustness. A single wind turbine can incorporate several tonnes of copper.

Solar power systems require copper in photovoltaic cells, inverters, and wiring. The global expansion of solar installations has spurred increased copper demand, given its role in ensuring system efficiency and reliability. Furthermore, energy storage solutions, vital for balancing the intermittent supply of renewable energy, use copper extensively in battery systems, notably in lithium-ion batteries for grid storage and residential solar setups.

Future prospects and sustainability

Looking ahead, copper’s future in the industry appears robust, driven by the rapid transition to green technologies and the expansion of digital infrastructure. Innovations in copper alloy development and recycling processes are enhancing the sustainability and efficiency of copper use. Improved recycling methods are crucial for meeting the growing demand without excessively depleting natural resources.

As global policies increasingly target carbon neutrality and sustainable development, copper’s role is set to expand. Governments and industries heavily invest in electrification and renewable energy projects, underpinning a stable and rising demand for copper. Its recyclability also supports circular economy initiatives, making it a critical material for sustainable industrial practices.

In conclusion, copper remains a cornerstone across a broad spectrum of industries. Its unique properties are integral to the advancement of AI technologies, the burgeoning EV market, and the deployment of renewable energy systems. As technological advancements accelerate and sustainability becomes paramount, copper’s significance is poised to grow even further, reinforcing its status as an essential industrial metal.

Is copper a good investment? 

With demand for copper forecasting to rise and shortages showing no sign of ending, copper could continue to grow in price as it becomes as desired as it is scarce. The International Energy Agency predicts that copper demand will outstrip supply, with demand reaching 35 million tonnes by 2023, with projected supply coming in at just 32 million tonnes. Rystad Energy reportedly forecasts a bigger shortfall, projecting a deficit of 6 million tonnes by 20230.

As per reporting by BTCC, Ole Hansen of Denmark’s Saxo Bank said in March that copper prices would be bolstered by interest rate cuts, which would encourage companies to restock on the metal. S&P Global has forecasted that the demand for copper will double and reach 50 million tons by 2035 as demand from India and China becomes fiercer.  If born out, these projections point toward a potential copper price increase that might pay dividends to the patient investor.

However, as with any investment, copper is not without risk. Speaking to Forbes, Jason Hollands of Bestinvest warned that the price of the commodity could fluctuate and is a prisoner to potentially unpredictable demand from China. Commenting, he said:

“Like many other commodities, copper prices are both highly volatile and extremely sensitive to the economic outlook, especially in China, given its role as the world’s largest manufacturing hub. Investing directly in copper is therefore not suitable for the risk averse.

If the economy is doing well, demand for copper is likely to be strong. Equally, the opposite applies, as seen from the price swoons of 2007 to 2008, 2016 and 2020.

However, demand is just one part of the equation. Supply must also be considered, which can be subject to mine development, local weather, accidents, funding, and local geopolitical developments.

Investors also need to keep an eye on the cost of production. This can be subject to local issues such as power prices, fuel availability and staff, as well as the supply of water.”

Always seek the advice of a qualified financial advisor before making any investment decision. 

Is copper on a bull run? 

Copper’s unique properties, such as its electrical and thermal conductivity, corrosion resistance, and malleability, have made it a critical material across various applications, from construction to electronics. The surge in demand from AI, EVs, and renewable energy sectors has breathed new life into demand for the metal.

The current market dynamics show a tightening supply and increasing demand, driven predominantly by resurgent growth in the economy. This has contributed to a significant rise in copper prices, with future projections suggesting continued upward trends.

The unexpected closures of major mines, such as First Quantum’s Panama mine, alongside reductions in output by other key producers like Anglo-American and Codelco, have exacerbated supply constraints, further fuelling market speculation over continued price increases.

However, potential investors must approach with caution. Copper’s market is highly volatile, influenced by economic conditions, geopolitical developments, and supply chain disruptions. Moreover, some analysts have warned that the price of copper is driven by speculation rather than value alone.

Ultimately, while copper’s strategic importance and growth prospects make it a compelling investment, investors need to weigh these opportunities against inherent market risks. As technological advancements continue and sustainability becomes a global priority, copper’s role as an essential industrial metal is set to expand, solidifying its status as a potentially rewarding yet complex investment.