Credicorp Capital estimates that copper demand will double by 2035

Credicorp Capital indicated in its most recent report on the copper that demand for the metal will double by 2035, and also predicted that the industry will not be able to meet its growing demand, so the shortage will drive an increase in the value of the metal.

Currently, China It is the largest consumer of copper in the world with a demand for approximately 50% of global production of the metal. For this reason, the growth projections of the Asian country could affect the prospects for copper in Latin America.

On the other hand, according to Credicorp Capitala recovery in copper demand is expected from developed economies such as Europe and North America, which represent 16% and 10% of global demand for the metal, respectively.

As the transition to renewable energy and electrification accelerates around the world, demand for copper will continue to increase. It is currently estimated that 15% of global copper demand comes from the energy transition and this percentage is expected to be 18% by 2025 and 23% by 2030. For its part, production prospects are not following the same pace, since a supply deficit of 400 kt is expected in 2024.

Finally, the Credicorp report indicates that in recent weeks the market has begun to recognize a relevant value in copper producing companies, evidencing a strong influx of purchase flows into these stocks.

The Global X Copper Miners ETF (COPX), made up of copper miners, has returned more than 16% in the month of March. This rally has led, in terms of valuation, to the average Latin American copper companies reaching EV/EBITDA multiples by 2024, above their historical average of the last 5 years.

The upward copper cycle is beginning and it is an appropriate time to invest and have exposure to metal producing companies, concludes Credicorp.