Rising copper demand triggers supply concerns

ISTANBUL

Rising demand for copper, one of the most widely used metals in industry and technology, has given way to concerns that there may be a supply shortage in the coming period as demand is expected to surge 50% by 2040.

Copper prices have continued to rise since July last year, reaching as high as $5.96 per pound amid supply concerns, hovering around record figures.

Global electricity consumption is estimated to rise nearly 50% by 2040, while copper demand worldwide is expected to rise at the same rate or even more, up from 28 million metric tons currently to 42 million tons, according to S&P Global’s “Copper in the Age of AI: Challenges of Electrification,” published on Jan. 8.

Basic economic demand, energy transition and the expansion of energy sources, artificial intelligence (AI) and data centers, and the modernization of defense are behind these estimates.

The essential economic demand and energy transition will be the largest drivers of copper consumption through 2040, with China and the Asia-Pacific leading the world in demand, according to the report.

AI and data centers make up a new area of demand due to their intensive electricity needs, direct copper usage, and rapid growth. Asia is expected to account for 60% of the increased demand in AI and data centers, while smaller but still significant rises may be seen in North America and Europe amid digitalization and efforts for clean energy.

The report expects a supply gap of some 10 million metric tons of copper by 2040 if no improvements are made to surface risks or significant investments.

The average quality of copper ore has deteriorated, complicating mining operations as well as making it more expensive to mine in major production regions like South America.

The report estimates that recycling could meet a quarter of the total demand by 2040, but it won’t be able to close the gap and supply from primary sources will be vital.

The copper supply chain is highly concentrated, which renders it vulnerable to global supply disruptions, policy shocks, and complex trade barriers, according to the report.

The average time that passes between discovery to production for a copper mine is 17 years, the report said, and a large portion of this time is allocated to securing permits, assessing the environment and making public consultations.

Inflation, low ore quality, and the rising costs of mining activities in deeper regions are on the rise, while ever-changing government conditions, tariffs and other regulatory frameworks fuel uncertainties and slow down investments and project development.

The report notes that the industry is facing a growing skill gap due to more retirements happening than new hires, as well as falling enrollment in technical programs at universities.

Copper was already expected to rise

Zafer Ergezen, a futures and commodities expert, told Anadolu that the rise in copper was already expected for some time, as despite the rise in demand, supply did not answer the demand at the same rate since 2025.

Ergezen said the rising demand is mostly due to the demand in the Asia-Pacific region, especially in China, where renewable energy, electric vehicle (EV) and chip and artificial intelligence (AI) sectors drive up demand.

“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 noted that the ongoing talks of rate cuts and expectations of economic recovery pushed up copper demand, while China’s strong auto sector is driving up demand even further.

He said silver demand may gradually begin to reflect on copper as well.

“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 said that copper may be one of the few commodities unaffected by the recent slowdown in global growth, and while supply slowed down due to growth concerns, it has not decreased in a significant way.

He added that the supply side has yet to see the expected rise, and some setbacks in South America and Australia put more pressure on supply, while demand continues to rise steadily, which means prices will only go up from here.