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New Energy May Become Copper‘s Key Application Field, Promising Huge Potential of Copper Consumption

The supply-demand balance in the nonferrous metals industry has long been a focus attracting concern of the whole industry. In recent years due to extensive style growth strategy, some enterprises experienced capacity surplus, supply exceeded demand, metal prices fell across all varieties. Since November 2015, zinc, nickel, copper, aluminum and rare earth industries one after another published joint production cut plans, according to Q1 figures, production reduction showed initial effect.

From the perspective of demand, because nonferrous metals are positioned at the upstream end of the industry, against the background of stable and continual economic development, future demand cannot be underestimated. Especially in copper consumption field, there are quite many new growth highlights.

Copper consumption maintains high level of positive correlation with economic growth. Although the Chinese economy has entered L-shaped growth, L-shaped growth does not mean no growth, in the future China’s trend of economic operation will remain stable in the overall sense, it will not show violent rally, nor will it experience obvious loss of growth speed. Therefore, copper consumption will continue to grow accordingly.

According to analysis, due to energy saving & emission reduction policy and new energy application vigorously promoted by the government, electric vehicle, solar photovoltaic and renewable energy will become main fields of future copper application in China.

Copper is an irreplaceable material for developing renewable energy. Regardless of solar energy, wind power generation or hydropower, highly efficient renewable energy constructions all depend on copper to transmit the power being generated, copper transmission can achieve higher efficiency and less environmental impact. Some organizations forecast that the development and utilization of global renewable energy will lead to soaring copper demand.

Furthermore, new energy automobile field will also boost the growth of copper consumption. Owing to more usage of electric system in new energy vehicle than traditional automobile, the demand of new energy vehicle for copper accordingly increases. According to estimate of the International Copper Association, copper usage of hybrid power sedan is about 40 kg/vehicle; electric vehicle uses slightly more copper, which is about 80 kg/vehicle. new energy vehicle represents key directions of the state government’s “Thirteenth Five Year Plan”. In May 2015, the “Made in China 2025” published by the State Council clearly mentioned that by 2020, sales of new energy vehicle is expected to top 1 million vehicles. Based on current development trend, it is expected that by 2020, China’s annual sales of new energy vehicle will be around 1.40 million vehicles, which needs at least 56000 tonnes of copper, up by 220%-530% when compared to copper used for traditional automobile. Railway telecommunication cable field will also embrace a new round of consumption peak period. In the “Thirteenth Five Year Plan” period, high speed railway mileage will reach 30000 km, in the next five years newly added high speed railway mileage will approach 11000 km, which at least needs 89000 tonnes of copper.

Excluding China, rapid development of many emerging countries also boosted the global copper demand. Countries along the route of “One Belt, One Road” initiative are mostly emerging economies and developing countries, which are prevalently in the ascending period of economic development. The deployment and pavement of their power and railway facilities will bring massive demand for copper, copper consumption potentials in Northeast Asia and Europe are particularly prominent.