🚀 AI-picked stocks soar in May. PRFT is +55%—in just 16 days! Don’t miss June’s top picks.Unlock full list

Demand for copper is improving, according to Julius Baer, but not because of AI

Published 12/04/2024, 05:02 am
© Reuters
HG
-

The demand in the copper market has been improving, with a more positive cyclical outlook, according to Julius Baer, which points to the energy transition as the strongest growth driver, including electric vehicle production and the installation of solar panels and wind turbines.

"Some have been labelling artificial intelligence data centres as another source of demand, but we would be surprised to see a material impact on the market," highlights the Swiss bank, which assesses the cooling of supply expansion as important, "as it pushes the copper market closer to the expected structural deficit." Julius Baer believes that the commodity market may undergo short-term consolidation after its recent recovery but assesses the fundamentals as solid and estimates $10,000 per ton in the long term.

"Reflecting China’s persistent economic problems, the mood across the industrial metal markets remained rather downbeat for most of last year. This seems to be changing as of late, following improving leading economic indicators, particularly in the copper market," highlights Carsten Menke, Head of Next Generation Research at Julius Baer, who notes that prices have risen more than 6% since the beginning of the month.

For Julius Baer, the growth of data centers amid the AI boom is not one of the reasons for the appreciation. "Most of the copper used in data centres is related to power distribution, with the remainder being related to the cooling system. This should result in less than 1% of additional demand growth during the next decade," concludes the expert, who considers the decrease in supply growth as a point to be monitored.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.