Copper: AI-driven demand reshapes pricing – Societe Generale

Societe Generale's Commodity Compass Analytics team, under the leadership of Michael Haigh and Jeremy Sellem, highlights that copper prices have been significantly influenced by AI-related demand, arbitrage flows, and US trade policy since February 2025. They point out that the scarcity of new mines, fierce competition for copper concentrates, and the rapid growth of AI, data centers, power grids, and electric vehicle (EV) sales have tightened the physical copper market and made traditional copper return analysis more challenging.

The report underscores that copper's recent price performance is a result of the interplay between conventional supply and demand factors and a new set of market forces centered around geographic arbitrage and US trade policy. The supply side has been constrained by the lack of new mine capacity and intense competition for copper concentrates, while the demand side has been propelled by increased investment in AI, data centers, power grid expansion, and rising EV sales.

The report aims to break down copper returns since February 2025, assess the impact of these various drivers on price performance, and offer a clearer framework for evaluating copper's outlook in an increasingly complex market environment.