The Federal Reserve's aggressive monetary policy tightening is slowing the country’s consumption and weighing heavily on the construction market, the largest copper consumption sector in the US. Meanwhile, the US is experiencing difficulties such as high input prices, worker shortages and supply chain disruptions, which are slowing down growth. Following a decrease of 0.6% in July, US construction spending in August slipped again at 0.7%.

Despite the short-term weak demand on the deteriorating macro environment, US demand for refined copper is forecast to rise over the medium term at a robust CAGR of 2.3% to reach 2,011kt by 2027, before easing to a moderate CAGR of 1.8% over the long term to reach 2,535kt by 2040.

Construction will be bolstered by the US Infrastructure Bill. The country will continue to expand its EV production, clean energy infrastructure and domestic manufacturing capability.

Significant upside revolves around increased public spending on infrastructure as President Biden aims to boost American manufacturers of green products, to power the economy medium-to-long-term, increase competitiveness, and fight climate change. Clearly, copper, with all its green energy applications, will be in high demand in all consumption sectors in future. 

EV Boom Goes On

The US ambitious carbon goal would require a radical transformation of the nation’s economy, including cars and trucks powered by internal combustion engines being replaced by their zero-emission counterparts.

President Biden has set a goal that 50% of new US car sales be electric by 2030. He plans to build a national network of 500k EV chargers by 2030. His plan will also replace 50k diesel transit vehicles, electrify at least 20% of the nation’s school bus fleet, and replace the government’s fleet of 645k vehicles with EVs.

The US Department of Transportation has given final approval for all 50 states to begin construction on a first nationwide network of EV charging stations that places one roughly every 50mi (80km) along interstate highways. This triggered the release of US$1.5bn in federal funds—or US$5bn over five years, as part of the Biden administration's goal of installing 500k EV chargers nationwide along federal highways.

California has passed rules prohibiting the sale of new gasoline powered cars by 2035. As other US states traditionally follow California’s standards, the new plan will accelerate the country’s transition to EVs, which in turn will increase copper demand.

Auto and battery makers have seen the writing on the wall and are making big promises in the hopes of grabbing market share as the sector continues to grow.

Volkswagen plans to invest at least US$7.1bn for North America over the next five years and add more than 25 new electric vehicles there by 2030.

General Motors (GM) has set a target to deliver 400k EVs in North America during 2022 and 2023. It plans to spend US$27bn to develop its 30 EVs by 2025, with two-thirds of these being available in the US.

GM, with joint-venture partner LG Chem, has begun production at its US$2.3bn, 35GWh-capacity battery plant in Ohio. The company plans to build a second plant in Tennessee, which will be similar in scope.

Ford said it would almost double its investments in EVs to US$22bn through 2025, with another US$5bn invested in autonomous vehicles.

Jeep has announced it will launch four all-electric SUVs in Europe and North America by the end of 2025. By 2030, the company is targeting 100% of vehicles sold in Europe and 50% of sales in the US will be all-electric.

Car rental companies and logistics operators are also getting on board. 

Hertz recently announced hundreds of thousands of EV orders from the likes of Tesla, GM and Polestar. Hertz is aiming for 25% of its fleet to be electric by 2024. Hertz is also teaming up with oil giant BP to build out a fast-charging network in the US for its growing EV rental fleet.

BP plans to expand its network of EV chargers to 100k plugs by 2030. Direct-current fast chargers, which can deliver up to 100mi (161km) of EV range in five to ten minutes, will account for 90% of those.

North American logistics operator Pride Group Enterprises has ordered 250 heavy-duty electric trucks from Daimler Truck’s Freightliner brand. The trucks will join the company’s fleet in mid-2023, as part of Pride's goal to become completely electrified by 2024.

Freightliner has also received orders for its heavy-duty electric trucks from Walmart and US food delivery company Sysco, which could take up to 800 e-trucks.

Freight transportation moves about 70% of goods in the US market. The Inflation Reduction Act, passed into law last month, provides a US$40k tax credit for buyers of medium- and heavy-duty zero emission vehicles.

Wind Takes Off

The accelerating shift towards renewable energy will require huge quantities of copper. This is particularly the case for wind energy, which is the most copper-intensive form of power generation. The US government has set a goal to deploy 30GW of offshore wind power in the US by 2030. Efforts to meet this target will trigger more than US$12bn per year in capital investment in projects. This will unlock a pathway to deploy 110GW by 2050.

In the state of New Mexico, Pattern Energy Group has completed construction of the 1.1GW Western Spirit wind complex, which marks the country's largest singlephase renewable energy project to date.

Western Spirit Wind is accompanied by a 241km transmission line from the wind power complex to the New Mexico grid. Pattern Energy has committed to a further US$6bn to wind energy and related infrastructure projects in New Mexico over the next decade.

Construction has begun on the 806MW Vineyard Wind 1 project in Massachusetts, the first commercial-scale offshore wind farm in the US. Massachusetts has already contracted nearly 2.5GW of offshore wind and committed to reach to 5.6GW by end of June 2027.

Rise Light & Power is set to start a mature offshore wind transmission project to replace existing fossil fuel generation with renewable energy. This will be the New York’s third offshore wind solicitation to produce 2GW of offshore wind energy. Dominion Energy, has received approval to build 2.6GW Coastal Virginia Offshore Wind (CVOW) project at 27 miles off the coast of Virginia Beach. It is due to complete construction in 2026. 

Solar Shines Copper

Looking at solar energy, the US will continue to advance the future-growth sector, which means demand growth for copper given it requires higher amounts of the red metal per unit of energy produced than fossil fuel-based power generation.

The EIA expects 21.5GW of new solar capacity additions this year, surpassing last year’s 15.5GW of solar capacity additions. The new solar capacity represents around 46% of the 46.1GW of new utility scale electric generating capacity to be added to the US power grid.

It is followed by natural gas at 9.6GW (21%), wind at 7.6GW (17%), batteries at 5.1GW (11%), and nuclear at 2.2GW (5%). Most planned solar additions in 2022 will be in Texas (6.1GW, or 28% of the total national additions), followed by California (4.0GW).

Spanish utility Naturgy Power Group SA has begun construction of a US$278m 300MW photovoltaic (PV) solar farm in Texas. Commercial operation will commence by end of 2023 and produce around 560GWhpa. The Spanish utility plans to invest over EUR1bn (US$1bn) in the US, targeting an operational capacity of 500MW in 2023 and 1.2GW in 2025.

An initiative to boost distributed solar energy in the US state of New York to at least 10GW by 2030 has been approved by the Public Service Commission (PSC). Governor Kathy Hochul announced a plan to expand the US$1.8bn, NY-Sun programme in September 2021 to bolster the state’s post-pandemic economic recovery. The state is currently approaching the programme’s 6GW by 2025 goal. The new distributed solar goal aligns with the state’s aim of getting 70% of its electricity from renewable energy by 2030.

In the state of Nevada, Primergy Solar is developing the giant US$1.2bn Gemini solar and storage energy project. The complex, set to be the country’s largest ever solar development, will be made up of a 690MW capacity PV plant and a 1,416MWh (380MW) battery energy storage system (ESS). It is expected to come online in late 2023 or early 2024.

California targets 25.5GW of new renewable energy capacity and 15GW of new storage and demand response resources by 2032. The construction of the Oberon Solar Project, for instance, has been approved, which will generate up to 500MW of renewable energy and have 200MW of battery storage capacity.

The move follows the approval of Clearway Energy Group LLC’s Arica and Victory Pass solar projects in Riverside County, with a combined power generation capacity of 465MW and up to 400MW of battery storage.

Alliant Energy Corporation has started commercial operations of a 50MW solar park in Richland County, Wisconsin, US. The Bear Creek Solar project is the company's first utility-scale solar farm as part of a plan to deploy more than 1GW of utility-scale solar energy at 12 sites across Wisconsin. Three additional projects are expected to go into service later this year.

Georgia Power is seeking approval to add 2.3GW of renewable energy capacity this year under a broader plan to expand its renewables resource portfolio to 11.5GW by 2035. The 2.3GW of new capacity is intended to help Georgia Power double its renewable energy generation resources by adding 6GW by 2035.

Prospect14 has partnered with a group of energy investors to launch Ampliform, a joint venture that will originate, develop, build, operate and optimise utility scale solar and solar and storage projects in the US. The JV plans to develop more than 10GW of solar projects in North America by 2025.