Copper Price Drops Amid Shrinking Supply and New Demand from AI
The price of copper has dropped by almost 8% from its record high in early August to around $6.30 per pound, despite a shrinking mine supply and bullish outlook.
Economist Steve Hanke had predicted that the metal would continue to rise due to a shortage in supply, but his call appears to have stalled after the price peaked at $6.92 on August 6.
The global mine output fell by 1.1% in the first half of this year, according to International Copper Study Group data, with Freeport-McMoRan's Grasberg mine still running at roughly half capacity due to a fatal landslide and Chile cutting its national production forecast for the second consecutive quarter.
On the other hand, AI facilities are creating new demand for copper, requiring up to 75 tons of metal per megawatt of data-center capacity. Analysts estimate that this could add around 475,000 tons of demand this year.