Copper Prices Surge Amid Supply Strains and AI Demand
Copper prices have hit record highs, and it's not just speculation driving the surge. The strain on supply is coming from weak mine output, policy risk in Congo, and an AI buildout that still needs old-fashioned wire.
Comex futures traded above $6.80 a pound in recent sessions, while MoneyWeek put the latest highs at more than $6.85 a pound and nearly $14,500 a tonne on the London market. That's not a normal move.
The squeeze is also visible in the physical market, with copper spreads repeatedly moving into backwardation this year. LME inventories have been drawn down as the US has pulled in shipments to cover its own premium over London prices.
Chile is the real warning sign, with Cochilco expecting a 2% drop in mine production this year and recovery not expected until 2027. Indonesia's Freeport-McMoRan Grasberg complex is another major pressure point, while Congo has imposed an export ban that could further strain supply.
The AI buildout doesn't just need chips, it also needs power, which runs through copper. S&P Global projects global copper demand rising from 28 million metric tons in 2025 to 42 million metric tons by 2040, but warns of a potential 10 million metric ton annual shortfall without major new mining and recycling.