Copper has had an impressive run in 2017, recording its best year since 2010. Improving economic conditions in China have worked to better the outlook late in the year. China is the world’s largest copper consumer, and imports 70% of its copper.
Bloomberg Intelligence has estimated that annual copper supply will be 395,000 tons below demand by 2022, which could bode extremely well for the future of the base metal. Global copper mines are also facing the possibility of severe disruptions in the coming months, which could shape the market into 2018.
Electric vehicle sales are also expected to have a positive impact on the copper market in the coming years. Demand could rise by more than 20% as more electric vehicle units are sold. Electric vehicles use a significant amount of copper in batteries and in windings and copper rotors. A single electric vehicle often utilizes several kilometers of copper wiring.
Investors who want to take advantage of this booming market should consider the United States Copper Index (NYSE:CPER). The fund has climbed 19.7% in 2017 and 14.8% year over year. It dipped 1% on November 29 to $19.61.
Most major automobile companies are expected to begin an aggressive rollout of electric vehicles beginning in the early 2020s. China has also made a commitment to phase out the combustion engine in a bid to enhance Chinese participation in the highly competitive electric vehicle market. A lot went right for the copper market in 2017 and the future appears bright heading into the next decade.