ING – Why copper and iron ore prices are diverging

Copper and iron ore prices are moving in opposite directions, with copper prices rising above $9,000/t while iron ore is closer to $100/t. China's concerns about the property crisis are weighing on the iron ore market, while copper is benefiting from increased demand for electric vehicles and renewable energy. As China shifts towards 'high-quality growth', sectors such as clean energy and high-tech manufacturing are becoming new growth drivers. Copper's use in EVs, wind turbines, and power grids is driving up demand, with no substitute for its use in these industries. The surge in copper prices is also due to unexpected supply constraints, such as the closure of Canada's First Quantum mine in Panama. The shift in demand drivers, with a focus on EVs, batteries, and solar panels, is expected to continue to support higher copper prices in the coming years. Last year, the rise in demand for renewables and EVs in China offset the downturn in more traditional sectors like the property market.