The Red Metal Roars: Copper Prices Soar on AI Boom and Supply Fears
Copper, often dubbed ‘Dr. Copper’ for its predictive economic prowess, is currently experiencing an unprecedented surge, poised for its best annual performance in over a decade. This remarkable rally, pushing prices to record highs, is fueled by a potent cocktail of factors: burgeoning demand from artificial intelligence infrastructure, the accelerating global green energy transition, and persistent supply anxieties.
Record-Breaking Run Continues
The red metal’s ascent has been nothing short of spectacular. Three-month copper prices on the London Metal Exchange (LME) recently touched a record high of $12,960 per metric ton, settling around $12,405. This year alone, the benchmark contract has climbed approximately 41%, putting it on track for its most significant annual gain since 2009, when it surged over 140% amidst recovery from the global financial crisis. In New York, copper prices have mirrored this trend, soaring more than 40% this year, also positioning it for its largest annual jump since 2009.
The AI and Green Energy Imperative
At the heart of copper’s demand explosion lies the dual force of artificial intelligence and the global push for decarbonization. Ian Roper, a commodity strategist at Astris Advisory Japan KK, highlights these critical drivers. “Copper has been a big beneficiary of the buildout of renewable energy, EVs, and now, of course, data centers is the big growth story,” Roper explained to CNBC. The electrification of transport, the expansion of power grids, and the construction of massive data centers—all foundational to the AI revolution—require vast quantities of copper for wiring, power transmission, and crucial cooling infrastructure.
Supply Disruptions and Macro Tailwinds
Beyond demand, the supply side presents its own set of challenges. Disruptions in mining and processing, coupled with a weakening U.S. dollar and improving economic sentiment in China, further tighten the market. These macro factors, combined with the structural demand shifts, create a compelling narrative for sustained high prices.
Expert Forecasts: Bullish Momentum vs. Short-Term Caution
The market is abuzz with analyst predictions, though not all share the same immediate outlook.
- JPMorgan’s Optimism: Analysts at JPMorgan are decidedly bullish, forecasting LME copper prices to average $12,500 per metric ton in the second quarter of next year and $12,075 through 2026. Gregory Shearer, head of base and precious metals strategy at JPMorgan, emphasized data center demand growth as an “extremely topical” upside risk. “All in all, we think these unique dynamics of disjointed inventory and acute supply disruptions tightening the copper market add up to a bullish set up for copper, and are enough to push prices above $12,000/mt in the first half of 2026,” Shearer noted.
- Goldman Sachs’ Measured View: In contrast, Goldman Sachs Research anticipates a short-term decline from recent record highs, projecting LME copper prices to hover between $10,000 and $11,000. However, even Goldman acknowledges robust global demand from grid and power infrastructure, bolstered by investments in strategic sectors like AI and defense, will prevent prices from dipping below $10,000. Their longer-term outlook remains positive, with a projection of $15,000 by 2035, surpassing many industry consensus estimates.
Copper’s Enduring Significance
As a critical component in the energy transition ecosystem—integral to electric vehicles, modern power grids, and wind turbines—copper’s role in the global economy is more vital than ever. The current rally underscores its indispensable nature, signaling a profound shift in demand dynamics driven by technological advancement and environmental imperatives. While short-term volatility may persist, the long-term trajectory for the red metal appears firmly set on an upward path, cementing its status as a cornerstone of the future economy.
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