Since copper takes big part in total copper cable net cost, the copper cable are easily effected by copper influctuation. So, our customer and us all pay close attention to copper trend. What will be the copper trend in year of 2018? Today we share the view from BHT Biliton on copper market.
In this article, we will specify ten reasons on BHT Biliton’s Optimistic View on Copper Market,based on the supply and demand, combining our own framework for assessing prospects for commodities
The supply factor
I. The grade of copper ore is gradually declining, and the global large-scale high-quality resources are depleted
The grade of copper ore is gradually declining, and the global large-scale high-quality resources are depleted.The main reason is that the grade of the porphyry copper mine continued to decline as the market expected in the long run.Porphyry copper deposits account for the largest portion of the world's total copper metal reserves and are currently the most important source of global copper supply.
II Lack of successful exploration discovery
At present, the world's major copper production is still derived from those giant mineral deposits that were explored and exploited decades ago.Their operating costs are also relatively low.However, data show that the exploration volume of these mineral deposits have reached their peak.
III Project investment risk
The amount of metallogenic exploration in OECD countries peaked in the 1980. These countries are faced with project investment, that is the "non-technical" challenges encountered in mine exploration and marketing of minerals are relatively low.
IV Water shortage
Data from CSIRO show that the amount of copper used to produce a conventional ICE car consumes about 1,600 liters of water. Important copper sources in the Atacama region of Latin America, the southwestern United States, Central Asia and South Africa who are facing serious water shortages.
Desalination plants can guarantee water safety for individual projects, but they require large investments and require large amounts of energy to keep the equipment running.Without saltwater desalination, copper miners will face many challenges in competing for water with other commercial users or the public in areas with scarce water resources.
In copper mining, or more generally in the mineral industry, ethical and efficient water management will be a competitive advantage for some operators. For those who can not do this, it will be a problem to continue having operation permits.
V.Reasonable market fluctuations
Copper mining industry has shown a more reasonable dynamic mechanism in the face of market pressure.
During the cyclical downtrend, the 90% quantile line (supply-demand balance) on the cash cost curve has become a valid support point for copper prices.Not all commodities are the same, and in some markets that have become sticky supplies, the price of minerals falls below the cash cost line of 90 per cent and lasts for several years.However, copper prices rebounded on the 90% sub-line during the recent copper price downturn.This shows that even in the era of zero interest rates, the copper market can still keep price fluctuations within a reasonable range when some other commodities have a significant sticky supply.
Copper cable is one of ZMS hotsale products with large capacity.
Since copper takes big part in total copper cable net cost, the copper cable are easily effected by copper influctuation. Now, we are to share second part on BHT view on future copper market.
The demand ---traditional applications
VI Chinese consumption
Household consumption is of growing importance to China's economy, such as automotive, technology products (such as smart devices) and household durable goods (such as air conditioners).This series of terminal demand will drive the copper demand in the market.Although the first- and second-tier cities in China have formed urban lifestyles, the potential demand for copper from residents in third-tier cities and below and in rural areas, which account for about 47% of China's total population, has yet to be fully released.In addition, the process of improving the quality of urban dwellings is not just about living space but how to use PVC copper wire to enhance the function of optimizing living.
VII India's rise
The rapid development of the Indian market will also be another good move to boost global copper demand.The urban consumers in India is about a decades behind the level of consumption in all key end-use applications associated with copper (except television) than the Chinese.
At present, the urbanization rate in India is still low. In addition, India's performance in the field of infrastructure construction also makes people look forward to. Because at present there is a large regional disparity in both quantity and qualit. So in the long run, the rapid economic development in India will bring new opportunities in many fields.
The demand——Technology trends
VIII.Electrification of energy needs
Our forecast assumes that from now until the middle of this century, the demand for electricity will exceed the growth of total energy demand.The electricity production, distribution and transmission of all aspects need to use a lot of copper.
IX.Electrification of traffic
The development of electrification of transportation is the trend of the times.Given that each pure EV uses four times as much copper (about 80 kg vs 20 kg) as conventional mid-size ICE vehicles,copper is expected to be the big winner in the electrification of light vehicles.
Among a range of possibilities we consider, our baseline projections show that the number of electric vehicles will increase to 230 million by 2035 and to 750 million by 2050.(By then, electric cars will account for about half of the total car ownership).We expect the number of electric vehicles to exceed 500 million by 2035 and reach over 1 billion by the middle of this century under the "green scenario" where technological progress is even faster and the policy environment is more favorable.
As more and more electric vehicles enter the light vehicle market，the on-board computer systems of these electric vehicles will also be more and more advanced, and the design will be increasingly sophisticated.Therefore, the current estimated amount of about 80 kilograms of copper per electric vehicle may not be able to meet the demand for copper will continue to rise.In fact, researchers at UBS have raised that figure to around 90 kg 7.
X.Wind and solar energy
Since the beginning of this century, wind power and solar power generation have achieved very impressive growth.With the rapid growth of new production capacity, related hardware costs also declined. Even without government subsidies, the cost gap is rapidly shrinking between wind and solar power generation in the world's major markets and traditional generation models.
From the perspective of copper consumption, the copper demand coefficient per MWh of offshore wind power generation is about 5 times that of coal-fired power generation and the solar power generation is about 2.5 times that of coal-fired power generation.With the long-term economic trends and the global over-emission of low-energy energy systems, renewable energy such as wind energy and solar energy will continue to grow at a high rate, which is one of the important reasons why we are optimistic about the copper market.