Hormuz Disruption Sends Copper Prices Soaring Amidst AI-Driven Demand

Copper prices have surged to near-record highs due to a combination of geopolitical and supply chain disruptions. The conflict over the Strait of Hormuz has led to a shortage of sulphur, which is used in copper smelting. This has caused prices to rise by more than 150% in key importing regions.

The shortage affects not just industrial buyers but also technology companies that rely on copper for their hardware needs. Copper is essential for the production of printed circuit boards, chip packaging, and other components used in data centers and AI infrastructure. The Yangshan premium, which reflects physical copper demand, has been rising due to buyer caution.

The Hormuz closure trapped an estimated 600,000 metric tons of sulphur in vessels across the Middle East Gulf. China's export ban on sulphuric acid exacerbated the shortage, affecting the operations of several major mines. The DRC's Copper Belt was hit particularly hard, with over 90% of its sulphur sourced from Middle Eastern refiners.