E-mobility triggers copper fantasy

The International Motor Show (Internationale Automobil Ausstellung – IAA) in Frankfurt opened its doors to the general public on Saturday. The automotive sector in Germany, which has been beleaguered by the diesel emissions scandal and speculation about unlawful collusion, is focusing at the IAA on electric mobility in particular. There is no doubt that the German automotive industry will launch an e-campaign with new models in the coming years.

The pronounced future trend towards e-mobility will significantly drive the demand for industrial metals over the next decades. In addition to metals such as lithium, cobalt and nickel, which are used to manufacture accumulators, copper in particular should benefit in the long-term. For example, up to 140 kilos of copper are built into an electric car, depending on the range. In contrast, a car with an internal combustion engine requires an average of only 23 kg of copper. Copper is also needed for expanding the charging infrastructure, which is still seen as a limiting factor. Roughly 25 kg of copper is required for each charging station. We can therefore conclude that copper will change in the long term from infrastructure metal to the metal of the future.

Globally, the share of electric vehicles will rise in the long term. The German government estimates that six million electric vehicles will be on the road in Germany in 2030.

In recent weeks, copper was viewed by many investors as a proxy for investing in e-mobilisation. The price of copper rose to a high of almost USD 7,000 per tonne. This over-exaggeration has meanwhile eased again somewhat.

Although we see copper as the metal of the future in the long term, the demand effects of the electrification of the vehicle fleet in 2017/2018 are not appreciable and therefore do not impact on market balance. We find the sentiment currently surrounding copper is better than the situation. The deficit in the copper market that we have anticipated for quite some time has not widened further recently. As we see it, the cumulative supply problems seen in Chile, Peru and Indonesia at the start of 2017 will not be repeated in 2018. We expect the price of the “red metal” to level off at USD 6,400 per tonne in the next twelve months.

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