The copper market is undergoing a structural shift. Traditional demand drivers — construction and power generation — are being eclipsed by artificial intelligence. Prices for the red metal now move almost in lockstep with the share prices of technology giants such as Nvidia and ASML, providing direct evidence that the AI boom has changed the rules of the game.
Xu Shendi, Director of Non-Ferrous Metals Trading at DH Fund Management, notes that the current copper rally is directly tied to structural trades in the artificial intelligence space. Sustaining further price growth will require a continued influx of investors into the technology sector alongside a reduction in mine supply.
According to trader Mercuria’s estimates, data centres alone will add 350,000 tonnes to copper demand this year — around 2.5% of annual global consumption. Giants such as Microsoft, Alphabet, and Amazon are investing record sums in AI infrastructure, having announced commitments of around $580 billion. The industry, however, is facing shortages of labour, energy, and equipment, meaning the actual incremental demand for copper may not materialise all at once but play out over time.
An arbitrage premium is also at work in the US market: prices on the Comex exchange exceed global benchmarks by approximately $400 per tonne, incentivising the physical flow of copper into America and threatening to create shortages on other regional markets.
Artificial intelligence is becoming the new “gold driver” for copper. But the path to fresh price records depends on how quickly technology companies can execute their capital plans and how long supply disruptions at mines continue.
Source: @nerzhavey
Image: Marcus Brandt
