We’ve outlined where ExxonMobil, the world’s biggest oil company, thinks that the energy markets will be once we hit the year 2040. (Begin reading the series here.)
So can we make any deductions from the overall ExxonMobil report as to metals demand during the next 30 years?
The greater reliance on electricity as a source of energy and the ongoing urbanization in Asia, Latin America and Africa will remain a major driver of copper usage. Although we are predicting copper will move into surplus through the middle/latter part of this decade, falling ore grades and rising demand are going to be supportive of higher prices down the line.
Likewise, aluminum, required for transportation efficiencies, aerospace and to meet rising consumer demand, will continue to enjoy long-term growth. Aluminum production already far exceeds consumption, so rising prices are less likely to come as a result of restricted raw material or smelting capacity as with the possibility of rising energy costs.
Little mention is made in the report of energy costs, only supply, although the rapid uptake of natural gas is in large part put down to cost benefits, with or without carbon taxes.
Steel and iron ore demand is likely to slow in China during the next decade as urbanization is overtaken by rising consumer affluence, causing a switch from construction steel products to household goods and autos. But ongoing population-driven demand in India, other parts of Southeast Asia and Africa are likely to pick up much of the slack left by China.
It’s hard to see of any metal that will not face greater tonnage demands in 20-30 years’ time than it does today, but clearly those with the most constrained supply base, often characterized by falling ore grades or unstable supply sources, will be the most likely to experience price volatility.