Joe Biden’s US$579bn infrastructure plan for the US is expected to have a profound impact on commodity markets and supply chains, particularly for metals such as copper, nickel and silver, according to one investment manager.
On Wednesday, Hamad Ebrahim, head of research NTree International, said copper specifically will be “one of the clear beneficiaries” of the infrastructure bill, which includes plans to modernise 20,000 miles of road, repair the 10 most economically significant bridges as well as 10,000 small bridges, and replace or repair 24,000 buses, 5,000 rail cars, 200 stations and thousands of miles of track, signals, and power systems.
“Assuming an annual US refined copper consumption of approximately 1.8mln tonnes per year then the increased infrastructure spending will translate into additional refined copper demand of approximately 500k tonnes over the next 5 years”, Ebrahim said.
The analyst added that both copper and nickel also stand to benefit from electrification spending, with the plan aiming to build 500,000 electric vehicle (EV) chargers by 2040 and replace 50,000 diesel transit vehicles with electric equivalents alongside at least 20% of the US yellow school bus fleet.
“EVs contain up to 10x more copper than internal combustion engine vehicles and each electric bus contains approximately 370kgs of copper. The US yellow school bus fleet size is approximately 480,000 and if 20% of the fleet is replaced by electric buses, an additional 35k tonnes of copper will be needed. The US also has a federal agency vehicle fleet of approximately 650k and transitioning all of those to electric vehicles will significantly increase demand for both copper and nickel…Assuming the US federal government contracts to buy American EV buses then Nickel demand from replacing the whole federal fleet should be in the order of 55kt”, Ebrahim said.
Also, the analyst said silver is also likely to be a “strong beneficiary” of the bill’s plan to boost the availability of affordable and reliable high-speed internet across the US.