AI-Driven Demand Boosts Base Metal Prices in July
Base metal prices surged in July due to strong demand from the artificial intelligence sector, supply concerns, and a weakening US dollar. Copper rose 4.7% per pound amid fears that current mining projects may not meet rising demand. The South Korea-Chile cooperation on critical minerals supported demand, with five agreements signed on lithium and copper.
The Seoul-Santiago partnership expanded their collaboration to include full value chain partnerships, information exchange, and technological cooperation. Concerns over mining supply in Chile and low processing fees signaled tightness on the supply side as global copper stocks continued to decline. Mounting production challenges due to unfavorable weather conditions and operational disruptions further strained copper supply.
Washington's plan to impose tariffs on copper imports fueled supply concerns, driving up prices. Meanwhile, aluminum rose 2.5% per pound amid tensions in the Middle East and low inventory levels. China's rising aluminum exports highlighted strong global demand.
Nickel jumped 5.2% per pound as the US reportedly plans to impose a 12.5% tariff on imports from 60 countries, fueling concerns over trading costs for the metal. Zinc prices increased 2.5% per pound due to low inventories and supply risks.
Futures and commodity markets expert Zafer Ergezen attributed the rise in base metal prices to demand from the defense and AI industries. He noted that despite recent selling pressure on AI stocks, the sector remains strong, with growth expected to continue in the coming period.