Russia’s attempted invasion in February 2022 sparked a metals-intensive war that has now lasted for almost two-and-a-half years.
“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 source 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.
“War is good for the metals business,” Fastmarkets analyst Andy Farida said. “And 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].”
Munitions factories ramping up
But while the war is not new, it seems munitions factories are only just responding.
In the early stages of the war, Russia and Ukraine drew from their stockpiles of mostly Soviet-era military hardware and, while the conflict has dragged on, both have increasingly sourced supplies from their international allies, depleting the stockpiles in those countries too.
Now, munitions factories around the world are ramping up production to restore diminished weapons stocks.
Take the NATO 155 mm artillery shells as an example. Every shell contains 0.5 kg of copper, and Ukraine is firing up to 7,000 per day, according to the European Defence Agency (EDA).
Russia’s equivalent of the NATO artillery shell is its 152 mm shell, according to the Royal United Services Institute (RUSI), a UK defense think-tank. While It is impossible to get exact figures, the institute, along with other defense think-tanks and a range of Western security officials, estimates that Russia is firing millions of shells per year.
Consultancy Bain & Company estimates that Russia is producing 4.5 million shells per year, with output increasing by 150% over the past 12 months.
Russia has supplied its military offensive from its own stockpiles so far, according to RUSI, although the Institute for the Study of War – a US-based defense think-tank – estimated that Russia has also received millions of shells from North Korea.
Factories in the US, the EU and the UK are also raising munitions production.
Before the war in Ukraine, US production averaged 14,400 shells a month, according to business news service Bloomberg, but specialist defense industry publication DefenceOne said the US is investing $5 billion to upgrade munitions factories, with the aim of getting output to 100,000 shells per month by the end of 2025, which would amount to 1.2 million shells per year.
Miner sources told Fastmarkets that US military demand is a factor drawing copper into the country.
Copper prices and production
Fastmarkets assessed the copper grade 1 cathode premium, ddp Midwest US at 10-14 cents per lb on Tuesday June 25. The premium was assessed at 7-9 cents per lb on April 9.
The EU produced 230,000 155 mm shells per year before Russia’s invasion of Ukraine, according to the EDA. Now, the EU is aiming to produce 1 million rounds per year by the end of 2024, with a longer-term goal of producing 3 million shells per year by the end of the decade, the agency said.
Fastmarkets assessed the copper grade A cathode premium, cif Rotterdam at $120-135 per tonne on Tuesday. The premium was assessed at $40-50 per tonne in February 2022.
In July 2023, the UK government awarded a contract to increase its production of 155 mm shells eightfold, which would bring annual production to 64,000 shells.
Meanwhile, a report from Dubai-based defense consultancy Simon Hunt Strategic Services estimated that 2021 global copper usage for military production was 2.19 million tonnes – representing 10.5% of total refined copper production of 20.8 million tonnes that year.
The same study estimated that military use of copper will increase by 14% per year until 2026, which would take it to 4.22 million tonnes.
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