With tight supply and growing demand, we discuss the outlook for copper.

Key Points:

  • The price of copper has enjoyed robust performance since the Covid-induced market trough in early 2020.
  • Demand for the red metal is growing, given its use in clean energy and 5G technology, while supply remains tight.
  • There are some potential headwinds to further price appreciation, including the risk of a slowdown in China.

The price of copper, often described as the global economic bellwether given the integral part it plays in industrial activity, has been one of the noteworthy Covid-recovery beneficiaries as activity has normalized. In addition to offering a multitude of valuable properties including strong conductivity, low reactivity to heat, and resistance to corrosion, its outlook is further enhanced owing to its use in the equipment required for governments to meet ambitious decarbonization targets.

Copper is a key component in solar panels, wind turbines and batteries used for electric vehicles, and its role in clean energy production is paramount. According to research from IDTechEx, electric and plug-in hybrid cars are projected to account for 72% of the total automotive market by 2040.1 The move to 5G technology provides further pressure, with the need to accommodate increasingly complex uses of data; indeed, copper is an essential component in the infrastructure of high-speed internet.

Potential Headwinds

We could well be in the first leg of a structural bull market for copper, although the ride may be bumpy and not without risks. While certain trends, such as the path towards greener forms of energy, are likely to be reassuringly long-term and support sustained demand for the red metal, one potential cloud on the horizon is a slowdown in China as authorities there shift their focus from the quantity to the quality of growth. This is likely to have repercussions for some of the ‘frothier’ sectors of the market such as property, which is unlikely to enjoy the speculation-fueled ride it has done in the wake of the global financial crisis.

This potential headwind is counterbalanced by a number of positive considerations; copper is primarily used in electrical wiring which tends to be used in the latter stages of the building process, thereby limiting the immediate impact of a slowdown in new construction. Our view is that a pickup in other areas of copper demand like white goods, autos, machinery and grid spending may also help to offset property weakness. Moreover, copper inventories are at record lows and supply is tight, with the only realistic substitute being aluminum, the price of which stands near multi-year highs. It therefore looks unlikely that the copper price will be held hostage to a stalling of Chinese growth, even if this were to materialize in force.

Diversified Demand

In summary, copper demand sources are well-diversified, and we believe the metal could form part of an armory of return-seeking assets, designed to capture the cyclical upswing as the recovery unfolds. While copper exhibits some inherent volatility, entailing a need to size the position accordingly in a multi-asset portfolio (although clearly this will depend on investors’ risk appetite), in our view it has an enviable position as a means of playing both the upswing in industrial activity and the move to embrace dominant 21st century trends, including the ‘greening’ of economies and the need for enhanced connectivity through 5G networks.


  1. EV motors boost copper demand, IDTechEx and International Copper Association, March 2020


Catherine Doyle

Catherine Doyle

Investment specialist

Any reference to a specific security, country or sector should not be construed as a recommendation to buy or sell this security, country or sector. Please note that strategy holdings and positioning are subject to change without notice.

Important information

This is a financial promotion. Issued by Newton Investment Management Limited, The Bank of New York Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Newton Investment Management Limited is authorized and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN and is a subsidiary of The Bank of New York Mellon Corporation. 'Newton' and/or 'Newton Investment Management' brand refers to Newton Investment Management Limited. Newton is registered in England No. 01371973. VAT registration number GB: 577 7181 95. Newton is registered with the SEC as an investment adviser under the Investment Advisers Act of 1940. Newton's investment business is described in Form ADV, Part 1 and 2, which can be obtained from the SEC.gov website or obtained upon request. Material in this publication is for general information only. The opinions expressed in this document are those of Newton and should not be construed as investment advice or recommendations for any purchase or sale of any specific security or commodity. Certain information contained herein is based on outside sources believed to be reliable, but its accuracy is not guaranteed. You should consult your advisor to determine whether any particular investment strategy is appropriate. This material is for institutional investors only.

Personnel of certain of our BNY Mellon affiliates may act as: (i) registered representatives of BNY Mellon Securities Corporation (in its capacity as a registered broker-dealer) to offer securities, (ii) officers of the Bank of New York Mellon (a New York chartered bank) to offer bank-maintained collective investment funds, and (iii) Associated Persons of BNY Mellon Securities Corporation (in its capacity as a registered investment adviser) to offer separately managed accounts managed by BNY Mellon Investment Management firms, including Newton and (iv) representatives of Newton Americas, a Division of BNY Mellon Securities Corporation, U.S. Distributor of Newton Investment Management Limited.

Unless you are notified to the contrary, the products and services mentioned are not insured by the FDIC (or by any governmental entity) and are not guaranteed by or obligations of The Bank of New York or any of its affiliates. The Bank of New York assumes no responsibility for the accuracy or completeness of the above data and disclaims all expressed or implied warranties in connection therewith. © 2020 The Bank of New York Company, Inc. All rights reserved.

Explore topics