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Rise in copper prices is linked to the automotive industry: BHP

The recent spikes in copper prices could be due to market confidence in the transition strategies adopted by automakers, BHP Group said.

Many companies that recently implemented a climate transition strategy are already benefiting from research and development (R&D) to produce new alternative vehicles and investments are being redirected towards increased production of such vehicles.

Increases in electric car sales grew 9% year-on-year in 2019, with more than 2 million cars sold, after several years of annual sales growth of more than 40 percent.

While these accounted for 2.6% of global car sales, there is a growing demand for these types of vehicles, particularly as reliability increases and costs decrease.

In this sense, China was the largest market in the world (1.06 million electric cars sold in 2019), followed by Europe (560,000) and the United States (326,000).

Copper prices

During 2020, copper prices on the London Metal Exchange (LME) traded in a wide range of $ 1.98 to $ 3.64 per pound, averaged $ 2.80 per pound, and closed the year at $ 3.51 per pound. pound.

In general, copper prices are significantly influenced by physical demand from emerging markets, especially China.

Copper prices fell to four-year lows in March due to initial concerns and short-term economic impacts from the spread of Covid-19, but subsequently rose to seven-year highs in December due to recovery in demand for copper. China, a weakening of the US dollar, low levels of world reserves and the expected impact of the global financial stimulus measures.

Production

According to BHP, the increasing advancement in technologies for producing electric vehicles is reducing costs and improving production capacity.

In terms of production efficiency, automakers reduced resource consumption per vehicle by 35% (on average), resulting in a substantial positive impact on production costs.

Additionally, one of the top costs for electric vehicles, batteries, has fallen rapidly in recent years.

In 2019, the weighted average battery price per sales fell 13% compared to 2018 and is expected to continue to decline through the conjunction of increased battery size, changes in battery chemistry and economies. scale thanks to larger manufacturing plants.

 

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