Copper is seen to replace oil with prices likely to surge to $15,000 per ton by 2025, according to a report by Business Insider.
Goldman Sachs expects copper prices to climb by 60% in the next four years due to increased demand and likely low supply from the current levels of around $9,000 per ton.
- Goldman Analysts, led by Jeff Currie, said, “Copper is the new oil” as it will be crucial in achieving decarbonization and replacing oil with renewable energy sources.
- Analysts say discussions of peak oil demand overlook that the substitution of oil for renewable will not happen without a surge in the use of copper and other key metals.
- Demand is expected to climb by up to 900% to 8.7 million tons by 2023 if green technologies are widely adopted. Even if the process is slower, demand will still surge by almost 600% to 5.4 million tons.
- At present, Goldman estimates a long-term supply gap of 8.2 million tons by 2030. This is twice the size of the gap that drove the bull market in the early 2000s.
- Production declined in 2020 due to government restrictions and lockdowns amid the COVID-19 pandemic. Top producers such as Chile and Peru were hit, possibly impacting supply until 2023.
- Global production is predicted to increase by 5.6% this year after a 2.6% decline in 2020.