Copper markets are witnessing a sharp rally as the red metal edges closer to the $12,000-a-metric-ton level, driven by rising demand from AI-led data infrastructure and growing concerns over supply constraints beyond the United States. So far this year, prices have surged 35%, putting the metal on course for its strongest annual performance since 2009. Earlier on Friday, the metal briefly climbed to $11,952 a ton, buoyed by disruptions in mining output and a wave of stockpiling in the US. Appeal for copper’s lies in its unmatched electrical conductivity, making it indispensable for power grids that support data centres, electric vehicles and clean energy infrastructure. Billions of dollars are being poured globally into modernising electricity networks, with data centres and renewable energy projects requiring massive and sustained power supply, Reuters reported. Investor appetite has also grown as artificial intelligence reshaped commodity strategies. “Investors who want a broad basket of AI interests will also buy into financial products which include hard assets that feed into data centres,” said Benchmark Mineral Intelligence analyst Daan de Jonge. “Investors will buy copper-related assets such as ETFs.” That shift has been reflected in new investment vehicles. Canada’s Sprott Asset Management rolled out the world’s first physically backed exchange-traded copper fund in mid-2024. The fund, which holds close to 10,000 tons of physical copper, has jumped nearly 46% this year, trading at almost 14 Canadian dollars per unit. Supply pressures remain a key concern. A survey by Reuters indicated that copper market will run a deficit of 124,000 tons this year, expanding to 150,000 tons in 2026. Production setbacks have further added to the strain, including an accident at Freeport McMoRan’s Grasberg mine in Indonesia in September. Major miners such as Glencore have also lowered their production guidance for 2026. Despite rising supply concerns, copper inventories across global exchanges have increased. Combined stocks held at the London Metal Exchange, Comex in the US and the Shanghai Futures Exchange are up 54% this year at 661,021 tons. Much of that metal has been funnelled into the US, where higher prices on Comex have drawn shipments since March ahead of planned import tariffs announced by US President Donald Trump, Reuters reported. Comex inventories have reached a record 405,782 tons, now accounting for 61% of total exchange-held copper, compared with just 20% at the start of 2025. “It feels incredibly tight because all of this material is going to the US,” de Jonge said. Refined copper was excluded from the 50% import tariffs that took effect on August 1, though US duties on the metal remain are still subjected to review, and an update is expected by June.Meanwhile, the outlook remains firm on the demand front. Global energy transition, including wind and solar technologies, is also expected to significantly lift copper consumption. Macquarie estimates global demand will reach 27 million tons this year, up 2.7% from 2024. Demand in China is projected to grow 3.7%, while consumption outside China is forecast to rise 3% next year. “Bullish sentiment is being driven by the narrative around tight supply, supported by macro news flows,” said Macquarie analyst Alice Fox.
