In this report, we evaluate copper demand under three different scenarios. In each scenario, we assume global GDP growth of 2% per year after 2021. The key difference in each scenario is our assumed rate of growth of renewable power capacity. We also assume that investment in electric networks aside from power plants and related infrastructure grows fastest in the bull case scenario, at 1.5x GDP (assumed power demand in this scenario grows at 3% per year). This compares to an assumed 1.25x GDP in our base case scenario and 1.0x GDP in our bear case.
• Our bull case scenario is based on the IPCC Path 1, which is what is likely needed to come in under 1.5°C of global warming above pre-industrial levels by 2050. This scenario is unlikely but would lead to very significant copper market deficits that would justify a multi-year period of copper prices far above the market’s current
expectations.
• Our bear case scenario is based on the IPCC Path 4, which is a “resource and energy intensive scenario” that includes an increase in greenhouse gas emissions in the medium term before a longer term trend down to 1.5°C of global warming above pre-industrial levels by 2100. In this scenario, which is also unlikely, the copper market would be adequately supplied until 2024 and then in deficit thereafter.
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David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
