Tok has always been one of the most outspoken bulls in the market; the company still expects the market to tighten in the future due to production cuts. In terms of product structure, the operating income of 10-30 billion yuan products were respectively 401/1288/60 million yuan, representing +28.10% YoY significant growth for the company's overall sales volume of 18,000 kiloliters in 2023.
One of the world's largest commodity traders, Trafigura Group, recently stated that the soaring copper price to record levels does not reflect real supply and demand situation in the spot market, and can not be reasonably explained from the fundamental. Trafigura has long been one of the most optimistic bulls in the commodity market. Saad Rahim, chief economist of Trafigura, wrote in a comment on the first half of the year published by the company on Thursday: "The fluctuation in the prices of non-ferrous metals is much higher than the levels that the actual spot market fundamentals may indicate or prove, especially copper." Due to the continuous reduction of smelters, Trafigura still expects the future market to tighten.
It is reported that the LME copper futures, the global benchmark for copper prices, surged to a historic high of US$11,104.50 per ton last month, but has since fallen back by about 10%, and traded at US$10,025 per ton on the London Metal Exchange (LME) on Thursday. While investors are buying copper futures in large amounts, the copper demand in the major consuming countries has been lukewarm, but the trend of global companies deploying AI technology and moving towards renewable energy is continuously driving up copper demand expectations.
Trafigura has long been one of the most optimistic bulls in the commodity market, especially in the copper market. Kostas Bintas, former head of Trafigura's copper trading business, predicted in 2021 that copper would enter a long-term bull market and could reach $15,000 in the future.
Last autumn, Trafigura's chief economist Rahim admitted that the performance of the copper futures market did not meet Trafigura's expectations. He attributed the poor performance of the copper market to the continued strength of the US dollar.
On Thursday, the chief economist attributed the recent surge in copper prices to record-breaking 'global fund flows.'
However, he expected the copper market to continue to tighten due to supply shortages, such as the closure of First Quantum Minerals Ltd.'s copper mine in Panama, which could trigger a record-breaking supply shortage in the semi-processed copper concentrate market. Rahim wrote, "Disappointing mine supply scale leads to severe shortage of copper concentrate, and also forces smelters to further reduce production. He pointed out that even if the demand is weak, it means that refined metal inventories will continue to tighten in the long term."
In addition to the significant reduction in copper concentrate production and the increasing difficulty of finding and mining high-quality copper ore with high mining cost, which jointly push up copper prices due to expectation of tightness in future copper production and supply, the AI craze driving the continuous growth of copper demand and the global trend towards renewable energy are also important supports for copper prices to break through the $10,000 barrier, which are the 'non-spot fundamental factors' described by Trafigura.
Morgan Stanley, a major Wall Street bank, said in its latest report that as global companies continue to make layouts in the field of AI and AI technology develops rapidly, copper demand will increase significantly, and AI data centers will become new growth points for copper demand. The commodity trading giant Trafigura also recently pointed out that by 2030, the copper demand related to AI and data centers may increase by as much as one million tons, and the supply shortage may intensify by the end of this decade.
In the huge AI data centers behind generating AI applications such as ChatGPT, copper metal is mainly used for electrical distribution equipment and grounding and interconnection. Specifically, copper is crucially used in power transmission (such as cables, connectors, buses), as well as heat exchangers and water tanks, grounding and interconnection, and piping and HVAC systems.
Morgan Stanley expects AI data centers to become new growth points for copper demand, and predicts that the global demand for electricity from AI data centers will grow at an annual compound rate of 18% from 2024 to 2027. The copper demand of AI data centers may increase from 200,000 tons to 500,000 tons annually in 2023-2027, with a compound annual growth rate of 26%.
Under the global trend of decarbonization, renewable energy may be the most important source of power generation, even without rivals. According to the latest statistics from Ember, an energy think tank, the share of renewable energy in the world's electricity scale rose to a record 30% last year, as the expansion and growth rate of renewable energy such as wind and solar energy continued to far exceed that of traditional fossil fuels such as coal. The think tank predicts that this trend will continue to accelerate this year.