Copper market to boom with EVs and renewable energy demand surge

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Investing.com - As the demand for electric vehicles (EVs) and renewable energy continues to grow, investors are expected to pour into the Copper market on an unprecedented scale, according to Citigroup Inc (NYSE:C) despite industrial metal seeing a slump in prices recently due to weakening demand from traditional sectors such as construction and consumer goods.

However, copper is quickly becoming the preferred commodity for those seeking exposure to the green energy transition. As the global economic growth outlook improves, Max Layton, Citi's managing director for commodities research, predicts that orders from car manufacturers and grid operators will trigger a buying frenzy in the coming years.

By 2025, Citi forecasts net bullish positioning in the copper market could reach around 4 million tons due to rising allocations from index-tracking investors and hedge funds – equivalent to roughly one-fifth of global supply – reversing current bearish sentiment.

Increased hedging activity by automakers may contribute an additional 1 million tons of long positions into futures markets just as physical industry demand starts outpacing supply. This shift could propel copper prices toward record highs.

Copper remains more liquid than other decarbonization-focused commodities like oil or battery metals such as lithium and nickel. While there is potential risk posed by new cost-effective superconductors challenging its superior position as an electrical conductor in future innovations, Copper's deep liquidity makes it far more attractive for investment at present.

Despite short-term price dips possible within six months-12 months window; under most optimistic scenarios that might see it reaching $15k per tonne by 2025; increasing EV adoption rates along with accelerating renewables expansion should continue driving investor interest towards this vital resource