Growing Demand for Copper Threatens Supply Deficits

(MENAFN) Intensifying appetite for copper—a cornerstone metal powering industries and technological advancement—has sparked alarm over potential supply deficits as consumption projections indicate a 50% explosion by 2040.

Since July of last year, copper valuations have climbed persistently, peaking at $5.96 per pound driven by supply anxieties and hovering near historic highs.

Worldwide electricity usage is projected to jump nearly 50% through 2040, with copper consumption globally anticipated to match or exceed that trajectory, climbing from a current 28 million metric tons to 42 million tons, per S&P Global's report "Copper in the Age of AI: Challenges of Electrification," released January 8.

Four primary forces underpin these forecasts: fundamental economic consumption, the energy transition alongside renewable source expansion, artificial intelligence (AI) paired with data center proliferation, and defense sector modernization.

Core economic requirements and the shift toward sustainable energy will dominate copper utilization through 2040, with China and the Asia-Pacific region spearheading global consumption, the report indicates.

AI infrastructure and data centers represent an emerging demand frontier, fueled by their extreme power requirements, direct copper incorporation, and explosive expansion rates. Asia is positioned to capture 60% of surging AI and data center demand, while North America and Europe face notable—though comparatively smaller—increases amid digitalization pushes and clean energy initiatives.

Without addressing surface-level vulnerabilities or securing substantial capital investments, the report forecasts a 10-million-metric-ton copper deficit by 2040.

Declining copper ore grade quality has intensified extraction challenges while inflating mining expenses across key production zones including South America.

Recycling operations could satisfy one-quarter of total requirements by 2040, the report projects, yet this won't bridge the shortfall—primary source supplies remain indispensable.

Copper's supply infrastructure exhibits severe concentration, exposing it to worldwide distribution interruptions, political upheavals, and intricate trade obstacles, the report warns.

From discovery through production launch, copper mines require an average 17-year timeline, the report stated, with substantial portions dedicated to permit acquisition, environmental evaluations, and community engagement processes.

Inflationary pressures, diminishing ore quality, and escalating costs for deep-earth mining operations are mounting, while fluctuating governmental policies, tariff structures, and regulatory landscapes intensify uncertainty and hamper investment flows and project advancement.

The sector confronts a widening talent shortage stemming from retirement outpacing recruitment alongside declining university technical program participation, the report observes.

Copper Surge Long Anticipated
Futures and commodities specialist Zafer Ergezen informed media that copper's ascent was foreseeable, noting that despite climbing demand, supply failed to maintain pace beginning in 2025.
Ergezen identified the Asia-Pacific zone—particularly China—as the primary demand engine, where renewable energy, electric vehicle (EV) production, semiconductor manufacturing, and artificial intelligence (AI) sectors fuel consumption.

"We saw that these caused a significant rise in demand, but we did not see it reflected much in pricing, since the Chinese economy had weakened — global growth also appeared to slow down due to rising interest rates, so we did not see a very strong movement in pricing until the last six months," he said.

Ergezen highlighted that circulating rate reduction discussions and economic recovery anticipations elevated copper demand, with China's robust automotive industry amplifying requirements further.

Silver demand dynamics may progressively influence copper markets as well, he noted.

"Global growth remains slow, and because it does, we can't see the effect of demand that much in pricing. But whenever global growth picks up again, especially when we start to see China make an economic return to its previous period with strong growth, there may be a massive increase in copper demand. This has a very high potential to push prices up, and we're already seeing it in the supply-demand imbalance," he added.

Ergezen suggested copper might emerge as one of few commodities insulated from recent worldwide growth deceleration, and though supply moderated amid growth apprehensions, significant contractions haven't materialized.

The supply sector has failed to deliver anticipated increases, he elaborated, with operational disruptions in South America and Australia intensifying pressure on availability while demand maintains steady upward momentum—signaling inevitable price escalation ahead.

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