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Urbanization

How the Expansion of Megacities Will Boost Metal Markets

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How the Expansion of Megacities Will Boost Metal Markets Full

How the Expansion of Megacities Will Boost Metal Markets

Urbanization drives metal demand, and megacities are leading the drive.

As developing economies grow, millions of people are moving to cities to pursue opportunities compounded by proximity and availability to resources. Many of these people see their economic circumstances improve, and consumption increases as a result.

Cars get more numerous, electricity and public transport networks expand, and consumers buy more electronic products for their homes. All of this means more steel, more copper, more aluminum, and more cement are needed.

The rise of China’s megacities in recent decades embodies this growth of living standards and demand for resources. By 2035, Oxford Economics forecasts that Asian cities as a group will be richer than European and North American cities combined, with six Chinese cities on the list of the 10 richest cities globally: Beijing, Chongqing, Guangzhou, Shanghai, Shenzhen, and Tianjin.

By 2035 these six cities are expected to double their wealth, while global average income per capita is expected to increase by only 37% during the same period.

This infographic, based on research from Swann, takes a look at how the growth of megacities will drive metal demand well into the future.

Megacities Metal Megatrend: Growth in Demand to 2035

The Swann Index measures the intensity of use of each metal by looking at global consumption in tonnes between 2014 and 2019, dividing by GDP per capita, and then forecasting demand up until 2035. Here are some key materials and how they are expected to fare:

MetalDemand (tonnes, 2019)Demand (tonnes, 2035)Change (2019–2035)
Nickel2.45.2116%
Steel1.72.650%
Aluminum66.0103.657%
Copper23.629.726%
Zinc13.714.56%

Nickel demand is forecast to increase by 116%, from 2.4 million tonnes in 2019 to 5.2 million tonnes in 2035. The drive is fueled by consumer goods, batteries, and high-value new applications, such as super alloys and stainless steel.

Aluminum and steel are also expected to see significant growth of 57% and 50%, respectively. Aluminum’s growth will be particularly noticeable due to the market size, with an expected demand of 103.6 million tonnes in 2035.

Copper’s demand growth will largely be pushed by decarbonization and the transition to electrification and automated technology. The metal is expected to see demand increase by 26% to 29.7 million tonnes in 2035.

In comparison, zinc is likely to underperform other base metals, with an estimated increase of only 6%. This modest growth reflects strong competition from aluminum in some end-use markets such as diecast alloys.

Future Megacities on the African Horizon

Though megacity demand for metals is being driven largely by Asian growth in 2020, the focus will likely shift in the coming decades.

Projections of future population growth and the world’s biggest cities all point to Africa as the next leader in growth, and subsequently, demand. Estimates show that 17 of the 20 fastest growing cities from 2020 to 2025 are located in Africa.

By 2100, the world’s three largest cities with populations greater than 70 million are projected to be in Africa, with Nigeria’s Lagos leading the way. In fact, of the world’s 20 largest projected megacities, 13 will be in Africa and zero will be located in China.

For now, Asian and primarily Chinese cities are leading demand for urbanization materials and already putting a strain on some metals. Even though the future megacity landscape might change, the expected continued increase in economic growth and incomes will continue to drive metal demand.

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Urbanization

Visualizing the Material Impact of Global Urbanization

The world’s material consumption is expected to grow from 41 billion tonnes in 2010 to about 89 billion tonnes by 2050. This graphic shows the impact of urbanization.

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Visualizing the Material Impact of Global Urbanization

Cities only cover 2% of the world’s land surface, but activities within their boundaries consume over 75% of the planet’s material resources.

With the expansion of urban areas, the world’s material consumption is expected to grow from 41.1 billion tonnes in 2010 to about 89 billion tonnes by 2050.

In today’s graphic, we use data from the UN International Resource Panel to visualize the material impact of global urbanization.

How Material Consumption is Calculated

Today, more than 4.3 billion people or 55% of the world’s population live in urban settings, and the number is expected to rise to 80% by 2050.

Every year, the world produces an immense amount of materials in order to supply the continuous construction of human-built environments.

To calculate how much we use to build our cities, the UN uses the Domestic Material Consumption (DMC), a measure of all raw materials extracted from the domestic territory per year, plus all physical imports, minus all physical exports.

Generally, the material consumption is highly uneven across the different world regions. In terms of material footprint, the world’s wealthiest countries consume 10 times as much as the poorest and twice the global average.

Based on the total urban DMC, Eastern Asia leads the world in material consumption, with China consuming more than half of the world’s aluminum and concrete.

Major Global Regions2010 Material Consumption (billion tonnes)2050P Material Consumption (billion tonnes)% total urban DMC change (2010-2050P)
Africa2.017.7792%
Southern Asia2.78.6223%
South-Eastern Asia2.05.6180%
Central and Western Asia1.94.7151%
Oceania1.12.6136%
Eastern Asia9.019.2113%
South and Central America6.511.171%
Europe8.310.425%
North America7.79.017%
World41.188.8116%

According to the UN, the bulk of urban growth will happen in the cities of the Global South, particularly in China, India, and Nigeria.

Consumption in Asia is set to increase as the continent hosts the majority of the world’s megacities—cities housing more than 10 million people.

However, the biggest jump in the next decades will happen in Africa. The continent is expected to double in population by 2050, with material consumption jumping from 2 billion tonnes to 17.7 billion tonnes per year.

A Resource-Efficient Future

Global urban DMC is already at a rate of 8–17 tonnes per capita per year.

With the world population expected to swell by almost two and a half billion people by 2050, new and existing cities must accommodate many of them.

This could exacerbate existing problems like pollution and carbon emissions, but it could equally be an opportunity to develop the low-carbon and resource-efficient cities of the future.

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Urbanization

Mapped: The World’s Next Megacities by 2030

Where will the world’s next megacities be by 2030?

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map of projected megacities by 2030

What is a Megacity?

In 1800, less than 10% of people lived in urban areas. Today, more than 4.3 billion people or 55% of the world’s population live in urban settings.

Mass migration from rural areas to urban centers gives rise to megacities—cities housing more than 10 million people, which are often the centers of economic activity in a given country. New York and Tokyo were the first to be recognized as megacities in the 1950s. Today, there are 32 megacities across the globe, and this number is set to grow.

The above graphic uses data from UN World Urbanization Prospects (2018) to map cities that are projected to turn into megacities by 2030.

The World’s Next Megacities

In most high-income countries including the U.S., Canada, Japan, Australia, and those in the Middle East, over 80% of the population live in urban areas. By contrast, in many low-income countries, the majority still live in rural settings, and the potential for urbanization remains high.

Therefore, many of the up-and-coming megacities are in developing countries.

CityCountry2022 Population2030P Population% Increase From 2022
SeoulSouth Korea 🇰🇷9,975,70910,163,0001.90%
LondonUK 🇬🇧9,540,57610,228,0007.20%
ChengduChina 🇨🇳9,478,52110,728,00013.20%
NanjingChina 🇨🇳9,429,38111,011,00016.80%
TehranIran 🇮🇷9,381,54610,240,0009.20%
Ho Chi Minh CityVietnam 🇻🇳9,077,15811,054,00021.80%
LuandaAngola 🇦🇴8,952,49612,129,00035.50%
AhmedabadIndia 🇮🇳8,450,22810,148,00020.10%
Dar es SalaamTanzania 🇹🇿7,404,68910,789,00045.70%

The fastest-growing cities—Dar es Salaam and Luanda—are both in Sub-Saharan Africa. Luanda is the capital city of Angola and among the 10 wealthiest cities in Africa. Dar es Salaam is the largest city and financial hub of Tanzania, and by 2100, it’s projected to be the third-most populous city globally.

Furthermore, five of the nine projected megacities are located in Asia.

Chengdu, located in Southwestern China, has been an attractive destination for foreign investment. As of 2020, 305 of the world’s 500 largest companies had operations in the city. Ho Chi Minh City (HCMC) is the fastest-growing Asian city on the list. In 2019, HCMC accounted for roughly 23% of Vietnam’s gross domestic product (GDP), highlighting its position as the main commercial hub.

Upon comparing the per capita GDPs of the countries listed above, London and Seoul are the two outliers, located in the wealthiest countries.

CountryGDP per capita (2020, current US$)
UK 🇬🇧$41,059.2
South Korea 🇰🇷$31,631.5
China 🇨🇳$10,434.8
Vietnam 🇻🇳$2,785.7
Iran 🇮🇷$2,422.5
India 🇮🇳$1,927.7
Angola 🇦🇴$1,776.2
Tanzania 🇹🇿$1,076.5

Source: World Bank

Both South Korea and the UK have a higher GDP per capita than the rest of the countries combined, and more than 80% of their population live in urban areas. Therefore, it’s unsurprising that Seoul and London have the lowest growth rates among projected megacities. By contrast, cities in Angola and Tanzania—the two lowest-income countries—are projected to grow by over 35% from 2022 to 2030.

The Urbanization Megatrend

The global urban population has been climbing for decades, while the rural population has started stagnating.

In 2007, the number of people living in urban areas eclipsed that of rural areas, and the gap is expected to widen. The UN projects that by 2050, 68% of the world will live in urban areas. Only a few countries are expected to have more people living in rural areas than urban settings, mainly in Sub-Saharan Africa and Asia.

Where will the new megacities beyond 2030 be?

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