LMEWEEK-Trafigura CEO downplays role of AI, defence in copper demand

By Tom Daly

LONDON, Oct 13 (Reuters) - Traditional applications for copper will continue to account for the vast majority of demand for the metal over the next decade, rather than data centres and the defence industry, the CEO of trading house Trafigura said on Monday.

Speaking at the LME Week seminar in London, Richard Holtum noted that defence spending and artificial intelligence (AI) were "buzzwords" in the conversation around metals demand at the moment. However, AI demand for copper will be "dwarfed three times" by demand from consumer goods this year, he said.

"The amount of copper that goes into just air conditioning ... is more than the amount of copper that's going to go into data centres this year," Holtum said in a dialogue with the CEO of the London Metal Exchange, Matt Chamberlain.

"Whilst everyone wants to talk about data centres and defence and it's all great, actually 90% of the demand for copper we see in the next 10 years comes from the traditional infrastructure, construction, urbanisation, consumer goods sources," Holtum said.

Consultancy CRU expects copper demand from data centres to reach 260,000 tons this year, up from 78,000 tons in 2020 and exceeding 650,000 tons by 2030.

Holtum said that while the new applications would add significant demand, "the amount of air time that defence and AI gets relative to where the actual demand is slightly disproportionate."

Trafigura estimates year-on-year growth in AI copper demand will be about 70,000 tons in 2025 compared to 250,000 tons of demand growth coming from consumer durables shipments, mainly going to emerging markets, a spokesperson said.

Over the next decade, Trafigura forecasts that AI will add 1 million tons of copper demand out of expected 10 million of total demand growth.