Copper tests new record amid AI and energy demand

Copper reached a new record, rising as high as $6.73 per pound on Monday due to strong artificial intelligence (AI) infrastructure investments, growing renewable energy demand and cost pressures further exacerbated by Middle East tensions.

Copper prices have continued to trend upward since last year, and the base metal has gained more than 18% this year amid accelerating global investments in data centers, energy infrastructure and power transmission systems. Expectations of stronger industrial production activity also drove up copper prices.

Supply constraints also contributed to the rise in copper as disruptions around the Strait of Hormuz and resulting issues in the sulfur supply chain affected copper production, fueling supply concerns. The combination of strong demand and supply-side issues drove copper to historic highs.

Slowing US inflation and rising concerns over the country’s economic growth eased hawkish expectations for the Fed’s future monetary policy decisions, providing upward support for commodity prices.

Copper later stabilized at $6.56 per pound.

Zafer Ergezen, a futures and commodities expert, told Anadolu that copper is one of the commodities with the highest demand, primarily due to AI investments, while other sectors like electric vehicles (EVs) and the global energy sector are major drivers.

“Reports consistently show a supply shortage in this area, so even if supply increases, the demand would grow at a much stronger rate,” he said.

Ergezen stated that US tariffs and the US-Israel-Iran conflict have been instrumental in the rise in copper prices, as mounting logistics and energy costs due to Middle East tensions increased prices across the entire mining sector.

“The most significant increase in demand for copper comes from the AI sector, and we’ve seen this particularly rapidly in China,” he said.

“We’re seeing massive investments, one-time deals worth $100 billion being signed in the AI sector, and these will continue in the coming period, which means copper demand will continue to rise and remain strong, meaning copper prices will continue climbing,” he added.

Ole Hansen, head of commodity strategy at Saxo Capital, said the intense supply competition between the US and China pushed copper above $6.70 per pound, while major copper producers struggled to meet their production targets.