Analysts from Macquarie and Mercuria challenged the narrative that the AI investment boom is a major driver of copper demand during a Bloomberg LME Week event in London on Tuesday. Nicholas Snowdon, head of metals and mining research at Mercuria, argued that copper prices are currently supported by US policy and constrained supply rather than demand. The London Metal Exchange three-month copper price closed at $14,420.50 per tonne on Tuesday, up 0.57% from the previous day.
Snowdon described the AI capital expenditure cycle as immense but noted that metals demand has underperformed traditional relationships with industrial production and manufacturing PMIs. Alice Fox, commodities strategist at Macquarie, called the AI boom "overhyped" in terms of its impact on copper demand, citing the relatively small scale of US data center investments. Gregory Shearer, head of base and precious metals strategy at JPMorgan, agreed that AI data centers are not a game-changer for copper but acknowledged the geopolitical importance of the metal in the AI race.
The panel discussed how cyclical demand sectors, such as construction and autos, are under pressure in China and Europe. Snowdon highlighted that around 200,000 tonnes of copper demand had been lost to substitution in China this year, though high aluminium prices have limited further switching. Fox estimated that the US holds about 1.6 million tonnes of copper, worth $23 billion, and warned that export restrictions could tighten the market further.
The US has imposed a 50% tariff on semi-finished copper products since August 2025, with a phased duty on refined copper set to begin in 2027. Snowdon described the influence of US tariff risk on copper prices as "one of the greatest feats of policy support for a price in commodity market history." Shearer noted that the US stockpile reflects supply security concerns rather than end-use demand, emphasizing the need to buy time to understand the market's direction.