Recent reports confirm that copper prices are being strongly supported by a powerful new wave of industrial demand.
At the heart of this trend are two key sectors: AI data centers and electric vehicles (EVs). First, the explosive growth of AI is fueling a massive build-out of data centers, which are incredibly power-hungry. Each megawatt (MW) of new data center capacity requires an estimated 12 to 26 tons of copper for internal wiring and grid connections. With projections showing US data center power demand doubling by 2027, this translates into a huge new source of copper consumption. Second, EVs require significantly more copper than traditional gasoline cars, and with the global transition to green energy, this demand is set to grow steadily. Together, these two sectors alone could account for nearly 10% of global copper demand by 2026.
This surging demand is colliding with a tightening supply situation, which we can see in the market data. A key indicator is the level of 'available' inventory at the London Metal Exchange (LME). While total registered stocks might seem adequate at times, the amount of copper that is actually available for immediate purchase has been shrinking dramatically. In late May, a massive one-day cancellation of withdrawal warrants caused available stocks to plummet to a 10-week low, sending prices upward again. This shows that the market is highly sensitive to signs of physical tightness.
Looking at the bigger picture, the fundamental supply-demand balance is also pointing toward higher prices. The International Copper Study Group (ICSG) forecasts that the market will shift from a small surplus in 2025 to a supply deficit in 2026. This is because bringing new copper mines online is a slow and difficult process, and existing supply chains for smelting and scrap recycling have their own constraints. This 'slow supply response' means that supply is struggling to keep up with the structural increase in demand from new technologies.
In essence, the narrative is clear: strong, technology-driven demand is running up against constrained supply and low available inventories. Reports from the ground, like CCTV's coverage of Chinese manufacturers seeing order books full until late 2027, confirm that this is not just speculation but a reality being felt across the supply chain. This combination of factors suggests that the copper market has entered a new phase of structural tightness, likely leading to continued price strength and volatility.
- LME (London Metal Exchange): The world's largest market for industrial metals, where benchmark prices are set.
- Available Inventory: The amount of metal held in LME-approved warehouses that has not been earmarked for withdrawal. It's a key measure of immediate supply availability.
- Supply Deficit: A situation where demand for a commodity is greater than its supply, which typically causes prices to rise.