Published on April 11th, 2018 | by James Ayre0
EVs Won’t Cause Copper Supply Shortages Anytime Soon, Analysts Say
April 11th, 2018 by James Ayre
Despite some expectations to the contrary amongst some stock traders and associated firms, the widespread adoption of plug-in electric vehicles won’t lead to copper supply shortages anytime soon, according to CRU analysts.
Ahead of the consultancy’s annual CESCO conference, which is focused on the copper market and features the attendance of execs from major copper miners/refiners and consumers, CRU put the kibosh on the idea that electric vehicles were going to cause a surge in copper prices.
“While EVs are a great long-term story, demand is only expected to be around 1.5% of world refined copper consumption this year, and even 5 years out is unlikely to be anything more than 3%,” argued CRU analyst Robert Edwards.
Considering the fact that vast amounts of copper are put to use every year for grid buildout and maintenance, and in electronics of every type, this shouldn’t be too surprising. The copper market is, after all, one of the largest minerals markets in the world.
Reuters provides more: “Copper bulls predicting a rapidly changing demand landscape due to the electric vehicle (EV) revolution and supply shortages are likely to be disappointed, as the amount of extra metal needed is expected to be small, at least over the next few years.
“… Copper prices at around $6,750 a tonne have fallen 8% since hitting a 4-year high of $7,312.5 in December, as worries about protectionism and weak demand in top consumer China have taken hold. Consultants at Wood Mackenzie expect EVs to add around 600,000 tonnes to copper demand in 2025 and about 1.6 million tonnes in 2035, still a small proportion of copper usage estimated at 24 million tonnes this year. More copper could be needed to modify and upgrade electric grids, but as yet there are no estimates.
“… The copper market is expected to slip into a deficit this year that could rise to more than 900,000 tonnes in 2021 and 2022, according to BMO Capital Markets, as supply growth slows due to deteriorating ore grades in countries such as Chile and lack of investment in new projects. However, global copper stocks of 4.1 million tonnes, according to BMO, offer a buffer, as could scrap and substitution with aluminium. In the very long term, a dearth of new projects could mean larger deficits, despite prices at levels that analysts say should incentivise new investment.”
As it stands, and going on research commissioned by the International Copper Association, plug-in electric vehicles required around 40–83 kilograms of copper a unit — varying largely by battery pack size. On average, petrol/gas and diesel cars require around 23 kilograms of copper per unit.
As one can see, the increased needs for copper (with a transition to EVs) aren’t that considerable. Something else to note is that changes with regard to the types and/or chemistries of the batteries being used by most manufacturers could considerably change the predictions made above. For more on that and related matters, see: