- The rapid expansion of artificial intelligence (AI) and data centers is generating a significant demand for copper.
- Predictions indicate that by 2030, there will be a deficit of 4 to 5 million tons in the metal industry.
- China, a prominent metal producer, is contemplating scaling back manufacturing operations due to challenges in raw material supply.
At the Financial Times Commodities Summit in Switzerland, Saad Rahim, the lead economist at Trafigura, a major commodity trading company, cautioned that the copper market could face further strain due to the influence of artificial intelligence.
Rahim highlighted that the growth spurred by the advancement of global information networks has been substantial, potentially resulting in an additional demand of 1 million tons by 2030, exacerbating the projected 4 to 5 million-ton deficit.
He emphasized that this aspect has not been adequately considered in the existing supply and demand assessments, raising concerns shared by others regarding the impact of AI on resource extraction.
Recent studies from the University of Washington revealed that the massive volume of queries processed by Open AI’s system consumes an amount of power equivalent to that used by 33,000 US households daily, emphasizing the energy-intensive nature of AI technologies.
Despite ongoing worries about the global economic outlook, the price of copper surged to its highest level in over a year, reaching nearly $9,400 (£7,444), driven by the increasing demand for copper in electric vehicles and renewable energy technologies amidst the energy transition.
Furthermore, the anticipation of reduced interest rates stimulating international manufacturing activities, where copper plays a vital role, coupled with a long-awaited revival in China’s property sector, has further underscored the growing demand for this essential metal.
However, challenges persist as China, the third-largest brass producer globally, faces constraints in maintaining a consistent supply of raw materials, prompting production cuts and impacting job markets in various countries.
Analysts, including Kieron Hodgson from Panmure Gordon, have noted that Chinese cutbacks are reshaping the global metal market landscape significantly, leading to price escalations and affecting the narrative for all players in the industry.
Noteworthy concerns have been raised by key copper producers such as Antofagasta, listed in London, regarding potential disruptions in short-term copper production.
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