Copper Prices Surge as AI Demand and Supply Issues Clash

Copper futures reached approximately $6.6 per pound on Tuesday, marking their third straight session of gains. The rally coincided with a broader uptick in risk assets, particularly in technology and artificial intelligence sectors. Strong demand for copper is being driven by the rapid growth of data centers and power infrastructure needed to support AI advancements.

Despite this positive momentum, near-term demand for copper remains limited due to signs of slowing industrial activity in China, the world's largest consumer of the metal. On the supply side, Chile's copper production dropped in August to its lowest level since February 2011. Additionally, workers at Antofagasta’s Centinela mine voted in favor of a strike after wage negotiations failed.

The Trump administration is still deciding on potential tariffs targeting refined copper. Earlier threats of US duties on refined metals prompted traders to divert shipments to American warehouses, contributing to the recent surge in copper prices.