Copper Hits Record Highs Amid AI Demand and Tariff Fears
Copper prices reached a record high of $5.10 per pound, driven by surging data center construction and trade policy uncertainty.
Copper traded at a record high of $5.10 per pound on the Comex exchange. The price mark reflects a sharp 15% increase over the past six months. This level tops all previous intraday highs since 2022. The market is pricing in immediate physical shortages. Supply constraints are tightening across major mining regions.
Demand from artificial intelligence infrastructure is the primary driver. Data centers require significantly more copper than traditional commercial buildings. Each gigawatt of new AI capacity consumes approximately 1,200 tons of the metal. This industrial shift is outpacing new mine development. Lead times for new smelters remain at five to seven years.
Tariff Threats Accelerate Stockpiling
Uncertainty over U.S. trade policy is prompting forward buying. Manufacturers are securing supplies ahead of potential duties. The White House has signaled a review of metal tariffs. This action creates a speculative premium in spot markets. Traders are positioning for a potential 25% import tax.
Inventory levels at the London Metal Exchange have dropped to 12,000 tons. This figure is the lowest in four years. Visible stock buffers are nearly exhausted. Physical delivery contracts are trading at a premium to futures. The gap between spot and contract prices indicates tight liquidity.
Supply Deficit Persists Through 2026
The International Copper Study Group projects a 400,000-ton deficit in 2024. This gap is expected to widen to 600,000 tons by 2026. Mine production is flat due to declining ore grades. Processing bottlenecks limit refinery output. No significant new supply is coming online before 2027.
Recycling cannot close the entire gap. Secondary supply contributes only 40% of total demand. Primary mining remains the critical variable. Energy costs are rising in key producing regions. Chile and Peru face operational headwinds. These factors support sustained price strength.
Market Volatility Remains Elevated
Daily price swings have widened to 3.5% on average. This volatility exceeds the five-year mean of 1.2%. Risk premiums are embedded in the forward curve. Hedging costs for end-users have doubled. Companies are locking in prices for the next twelve months.
The GN auto markets/commodities desk notes this trend is structural. It is not a temporary spike. The convergence of digitalization and trade friction is unique. Copper is essential for electrification and computing. The metal’s role in the global economy is expanding. Investors should expect continued price discovery.
