Trafigura, a top commodity trader, shared information on the changing global markets and the rising demand for copper. Financial Times Commodities Global Summit in Lausanne was where Trafigura presented their insights.
Saad Rahim, the Chief Economist, highlighted the strong economic growth in various regions, emphasizing the recovery of European industrial demand and the better-than-expected performance of China. He also pointed out the strong global growth indicated by oil prices around USD 90 per barrel and copper prices near USD 9,500 per ton.
Rahim stressed a potential deficit of 4 to 5 million tonnes of copper by the end of the decade due to the energy transition, electrification of transportation, and the increasing demand from emerging sectors such as data centers and AI.
Rahim mentioned, “In addition to the energy transition, we are introducing more sources of demand. The power demand from data centers and artificial intelligence could potentially create an additional need for 1 million tonnes of copper.”
Richard Holtum, Global Head of Gas, Power, and Renewables at Trafigura, echoed Rahim's thoughts on the impact of AI on power markets. He highlighted the substantial power requirements of AI, stating that “A ChatGPT query consumes 9 times more power than a Google search.” He emphasized that as AI becomes more prevalent, the demand for electricity will rise, leading to significant investments in power infrastructure, particularly copper-intensive grids.
Holtum emphasized the importance of natural gas and nuclear power in meeting the growing electricity demand, stressing their role as cleaner alternatives to coal. He emphasized, “We will also need substantial amounts of copper to support this additional power demand through the grid.”
Furthermore, Holtum explained the impact of AI on the commodity trading industry, noting that AI would improve back-office efficiency and enable traders to make better decisions, transforming trading practices.
In conclusion, Trafigura’s insights illuminate the intricate connection between economic growth, the energy transition, and the increasing demand for copper driven by emerging technologies such as AI. As the world moves towards a sustainable future, the role of copper in facilitating this transition becomes increasingly essential.
