Copper Tops $14,000 as AI Power Demand Meets Tight Supply
International copper prices have climbed above $14,000 a metric ton, approaching their highest level of the year, as surging demand from artificial intelligence data centers and power-grid upgrades collides with growing supply concerns. Demand is expanding rapidly, while severe weather in major prod
Copper prices surpassed the $14,000 mark per metric ton, nearing their yearly high, due to a surge in demand from artificial intelligence data centers and power-grid upgrades, coupled with supply concerns. Rapid demand growth contrasts with supply tightening fears exacerbated by severe weather in key copper-producing nations. Chile's recent storms have disrupted mining operations, leading Lundin Mining to revise its 2026 copper production guidance downward.
As of Aug. 21, three-month copper futures on the Korea Exchange and London Metal Exchange were trading at $14,215.50, up 3.08% this month and approaching the year's peak of $14,527.50 in January. Copper prices are also nearing their 2011 peak when adjusted for inflation, indicating one of their strongest performances in over half a century.
The primary driver of copper's rise is the structural increase in demand as electricity consumption grows. Copper is crucial for the power system, from generation and transmission to end use. The rapid expansion of AI data centers has significantly increased copper consumption for internal equipment and power-grid infrastructure.
Additionally, the replacement and expansion of energy transition networks, along with growing demand from the defense sector, are deepening the supply-demand imbalance. Analysts project that global copper demand will increase by about 50%, from 28 million metric tons in 2023 to 42 million tons by 2040. This growing demand from AI and defense, alongside traditional economic cycle-linked demand, could result in a potential copper shortage of around 10 million tons by 2040 if supply does not increase.
Supply-side disruptions have further fueled the price rally. Severe winter storms in Chile's Atacama region, the world's largest copper-producing country, have disrupted mines, prompting Lundin Mining to lower its 2026 production guidance. This has heightened concerns over supply. The rise in commodity prices is also evident in South Korean equities, with shares of nonferrous metals producer Egu Industry and cable and metals-related companies increasing by 10.76%, 14.87%, 9.93%, and 9.27% respectively.
Some investors are advised to allocate assets to physical copper exchange-traded funds (ETFs) as a hedge against inflation. Market experts believe the imbalance between copper supply and demand will persist into the second half of the year. While available inventories on the London Metal Exchange have risen to 166,776 metric tons, more than 60% higher than the previous week, they still remain less than half their peak level four months ago.
Analysts suggest that although the recent increase in inventories has caused a slight correction in futures prices, signs of a physical shortage still persist. Policy uncertainties, such as potential U.S. tariffs on refined copper, could also continue to influence the market, maintaining the global supply-demand imbalance as a central concern for investors.
Written by urgent.news from BusinessKorea's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
