Exploring Drivers of Copper Supply and Demand Using a Dynamic Market Simulation
Several authors have suggested that supplies for key non-renewable resources may soon cease to expand at the same rate as demand. Inevitably this would lead to some peak and then decline in production. This work describes the development and application of a fully dynamic model of the copper market. This model includes both a probabilistic simulator of future supply expansion based on published data on copper deposits and a novel model of copper demand that includes both short-term and long-term elasticity of demand—both due to self-price and aluminum price. Using this model in long-term simulations suggests significant copper reserve depletion would not be expected to occur in this century. The model predicts a time frame to significant depletion that is more than 50% further out in the future than previously reported results that did not include these effects.
KeywordsPrice elasticity Economics Criticality
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