Ukraine war sparks surge in copper demand

Russia's war against Ukraine is increasing the demand for copper, sources told Fastmarkets.

In the latest event of the conflict that has extended since 2022, a barrage of Russian missile strikes hit targets in cities across Ukraine on Monday, including a children's hospital in Kyiv, killing at least 22 people and injuring 68 more.

"Every day, the war consumes many tonnes of copper – at the end of the war, there will be a new mine in Ukraine with all that copper scrap," a producer told Fastmarkets.

"It's increasing brass demand."

Most munitions use copper in some way, and bullet cartridge casings are made of brass, an alloy of copper and zinc.

A NATO 155-millimeter (mm) artillery shell contains 0.5 kg of copper. Ukrainian forces are firing up to 7,000 per day, according to the European Defence Agency (EDA).

According to the Royal United Services Institute (RUSI), a UK defense think tank, Russia's equivalent is the 152 mm shell. According to consultancy Bain & Company, Russia produces 4.5 million shells annually, increasing output by 150% over the past 12 months.

According to Bloomberg, US production averaged 14,400 shells a month before the war in Ukraine. However, specialist defense industry publication DefenceOne said the country aims to increase output to 100,000 monthly shells by the end of 2025.

"War is good for the metals business," Fastmarkets analyst Andy Farida said.

"Part of the reason copper prices have been resilient, while the other base metals have not, could be due to increased demand from the ongoing war in Ukraine."

The industry's military demand for copper has been a point of focus over recent years.

Mining magnate Robert Friedland told Bloomberg recently that despite China's weak real estate market, military demand in the country is very high.

"Europe is rearming; Japan is rearming. The United States military is worried about a shortage of 155 mm howitzer shells. Where do you think the world's army is made out of when all the shooting goes on?" Friedland told Bloomberg.

"If someone is pointing a gun at you, you need that copper to shoot back."