Demand for copper, to a certain extent, is dependent on the situation of the international markets served.
As a result, copper producers and end-users are subject to various business risks and potential costs, associated with international operations. These factors include economic and political instability, international trade disputes, abrupt changes in regulatory requirements and currency exchange rate fluctuations. The copper industry is being challenged by rising prices, which has increased the substitution rate of copper by alternative products. High copper prices coupled with technologically superior substitutes (e.g. fiber optics telecom cable), regulatory changes supporting use of plastics in plumbing industry, as well as shift of manufacturing activities to China are among the key factors giving way to copper substitutes. Several environmental issues also plague the copper industry and threaten to overwhelm the market if not taken care quickly. Faulty disposal of tailings has long been a problem with copper mines, as they tend to pollute ground water. The problem has raised protests from environmentalists worldwide. Besides ground water contamination, a few mines also cause air pollution, which has become a cause of concern to residents near the mine site. This has led to stringent environmental implications for the industry.
On the growth front, region-wise, the Asian markets are likely to drive the overall red metal demand in the near future. China is the largest copper consumer in the world and if China's consumption were excluded global copper production would be considered superfluous. Demand for refined copper in China has been increasing due to rapid development in end-use sectors such as telecommunications, power, equipment manufacturing, automobiles, construction and consumer goods. Chile is the largest producer of mined copper worldwide accounting for a global share of over 30% in 2009, followed by other major producers such as Peru and the United States.
Increasing demand from existing and niche market applications in areas such as building and construction, electrical and electronic equipment, consumer products, and telecommunications will stimulate copper demand. The potential of copper application in electric/battery-powered cars has not yet been fully tapped. Growth in this segment appears high, especially for battery rechargers. Copper cables handle digital transmissions to the extent of bit rates higher than 1.5 Mbps to 9 Mbps, over the 1,000 feet of drop wire. This lends a positive future for copper in core switching and transmission products. Switched Digital Video (SVD) providing services such as multimedia, digital graphics, high-speed Internet also represents a growing market for copper. In addition, Renewable sources of energy are expected to stimulate the demand for copper products during the next two decades. Biomass, wind energy and geothermal, the three most common forms of renewable energy make vast use of copper products. Currently, renewable sources account for around 2.5% of the energy supply in the US and are anticipated to rise to 5.0% by the year 2030.
Decline in demand, coupled with global economic recession affected copper prices to a large extent during the 2008-09 period. The surplus in the market grew and the stocks piled up due to low demand and challenging economic conditions. Both the developed as well as emerging markets witnessed significant slowdown, which brought about a slump in industrial metals prices. Copper prices declined to as low as US$2,000 in 2009. The global copper mine production was also affected due to low margin levels, slowdown in the economy, and the global economic recession. Tightness in the worldwide copper concentrate market continued to impact the production of refined copper, particularly in Asia and China. The global copper market registered a surplus in 2009, an increase from the level recorded in 2008 owing to the decreased usage rates in China and the US. The trend continued on the same path for 2010 as well, given the weak demand and usage of copper in the international market. Mine capacity utilization rates are not likely to rebound for a certain period and would continue to restrict growth in case of refined copper production.
Asia-Pacific, backed by China towers over the other regions as the single largest copper market, as stated by the new market research report on Copper. Copper industry in Asia is impacted by capacity expansions, investments by companies from the Western World, increasing exports and discovery of new mines. Europe is the other significant copper market worldwide, backed by demand from Germany, Italy and other Easter European countries. The Asian region, powered by markets including China, India, Korea, Taiwan and Indonesia among others is likely to race ahead at a rapid compounded annual rate for 2007-2015. By end-use application, Building & Construction accounts for the largest copper demand. However, in terms of highest growth potential, the market for Consumer & General Products is forecast to surge ahead at the fastest CAGR through 2015.
Key participants profiled in the report include Anglo American PLC, Antofagasta Plc, BHP Billiton Group, Cambridge Lee Industries LLC, Codelco, Vale Limited, First Quantum Minerals Ltd., Freeport-McMoRan Copper & Gold Inc, Phelps Dodge Corporation, The Furukawa Electric Co., Grupo México S.A. de C.V, Global Brass and Copper, Inc., Inmet Mining Corporation, Jiangxi Copper Company Limited, KGHM Polska MiedŸ S.A., KME AG, Mitsubishi Materials Corporation, Mitsui Mining & Smelting Co. Ltd., Nippon Mining & Metals Co., Ltd., Aurubis AG, Norilsk Nickel, OM Group Inc., Rio Tinto Group, Sumitomo Metal Mining Co. Ltd., Teck Resources Limited and UMMC Holding Corporation.
The research report titled “Copper: A Global Strategic Business Report” announced by Global Industry Analysts, Inc., provides a comprehensive review of industry and product overview, copper substitutes, end-use markets, copper demand, production, recent industry activity and profiles of market players worldwide. Analysis and overview is provided for major geographic markets such as US, Canada, Japan, Europe, Asia-Pacific, Latin America and Rest of World. Market analytics are provided in terms of volume (metric tons) for end-use segments including Building & Construction, Electrical & Electronic, Industrial Machinery & Equipment, Transportation and Consumer & General Products. The study provides historic data for an insight into market evolution over the period 2000 through 2006.