Copper prices rise on AI demand hopes, but doubts are growing

In short: Copper has been priced like AI will drive a big, lasting demand surge, but more investors and analysts are questioning that assumption.

What's going on

Copper has been one of the main talking points in the metals world, partly because AI needs lots of electricity and equipment, and that equipment uses copper. Copper is used in wiring and cables, and it is the metal that helps move electricity around, like plumbing pipes move water.

At an industry gathering in London, traders and mining executives discussed whether the expected jump in copper demand from AI could be smaller than many forecasts suggest. One major metals investor told the Financial Times they think there is a good chance AI is a bubble, and that a pullback would likely weigh on metals prices.

Some data suggests AI related infrastructure is starting to matter, but it is still a small slice of the full market. Trafigura estimated data centers would add about 350,000 tonnes of copper demand this year. Total global copper demand is about 28 million tonnes a year.

Analysts also questioned whether current copper prices reflect real supply and demand, or excitement about AI plus policy worries. Macquarie said the world had a copper surplus last year, and it expects surpluses for the next few years. Separately, possible US copper tariffs have encouraged stockpiles to move into the US, which can make supply look tighter elsewhere.

What to watch

Two things could shift prices quickly. One is whether AI spending on new data centers slows, which would reduce expected copper demand. The other is US tariff policy, since removing the tariff threat could push stored copper back onto the global market.

Source: Financial Times