Copper Prices Must Rise Further to Meet Demand

Copper prices have reached record levels, but experts say they need to rise even higher to solve a supply gap caused by falling grades, rising capex, and burgeoning demand from new technologies like AI.

The red metal has become the central focus of every large miner on expectations it holds the key to technological changes in a rapidly shifting landscape. Over the past financial year, copper overtook iron ore as BHP's biggest earner, a symbol of the shift from steel as the key ingredient of urbanisation and industry to wires, poles, and computer chips.

The age of the cloud is here, and it requires much more copper to sustain its commodity and energy-hungry expansion. LME three-month contract touched an all-time high of $14,415.50/t, up close to 50% in the past year. Victor Smorgon Group's Ben Salter says copper could rise further, with 'the supply side just continuously getting tougher.'

Salter believes higher prices are needed to incentivise new projects, with majors forced to build projects that have been previously unpalatable at lower levels. The projects that aren't built now are not as good quality, he said.