Copper prices have climbed sharply this year, approaching the $12,000-a-metric-ton threshold as a combination of constrained supply, strong investor activity and rising expectations of demand linked to artificial intelligence and energy infrastructure reshapes the global market. Last Friday, benchmark copper prices touched $11,952 a ton, marking a gain of about 35% so far this year and putting the metal on course for its largest annual increase since 2009. The rally has unfolded against a backdrop of mining disruptions, shifting trade flows and stockpiling, particularly in the United States, as well as longer-term expectations tied to electrification and digital infrastructure.

Copper’s use underpins much of the demand outlook. The metal is prized for its electrical conductivity, making it a core component of power grids that supply electricity to data centres, electric vehicles and renewable energy systems. As governments and companies invest billions of dollars globally to upgrade and expand electricity networks, consumption of copper has risen in tandem. Data centres, including those supporting artificial intelligence applications, require large and stable supplies of power, further reinforcing demand for copper-intensive infrastructure.

The broader energy transition has also been a key factor. Renewable energy technologies such as wind turbines and solar installations rely heavily on copper wiring and components, adding to the metal’s importance as countries pursue decarbonisation strategies. Analysts have linked these structural trends to sustained growth in copper consumption over the coming years. Macquarie estimates that global copper demand will reach 27 million tons this year, representing a 2.7% increase from 2024. Demand in China, the world’s largest consumer of metals, is forecast to rise by 3.7%, while demand growth outside China is expected to reach 3% next year. According to Macquarie analyst Alice Fox, bullish sentiment in the market has been supported by a narrative of tight supply, reinforced by macroeconomic developments and news flows.

Supply-side pressures have played a significant role in the price surge. Disruptions at major mining operations have added to concerns about availability. In September, an accident occurred at Freeport McMoRan’s Grasberg mine in Indonesia, one of the world’s largest copper and gold mines. At the same time, miners including Glencore have reduced their production guidance for 2026, strengthening expectations that supply constraints could persist.

Forecasts suggest that the copper market is heading into deficit. A recent Reuters survey of analysts indicated a projected shortfall of 124,000 tons this year, widening to 150,000 tons next year. These anticipated deficits have contributed to heightened interest from both industrial users and financial investors. Investor activity has become an increasingly visible feature of the copper market. According to Daan de Jonge, an analyst at Benchmark Mineral Intelligence in a recent note, investors seeking exposure to artificial intelligence often turn to broad financial products that include hard assets used in data centre construction and operation. As a result, copper-related assets, including exchange-traded funds, have attracted inflows alongside more traditional technology investments.

One major development has been the launch of new investment vehicles backed by physical copper. In mid-2024, Canada’s Sprott Asset Management introduced the world’s first physically backed exchange-traded copper fund. The fund holds nearly 10,000 tons of physical copper, and its units have risen by almost 46% this year to nearly 14 Canadian dollars each.

Trading dynamics have also shifted as copper has increasingly been drawn into the United States. Since March, traders have been shipping large quantities of copper to the US, responding to higher prices on the Comex exchange ahead of planned import tariffs announced by US President Donald Trump. Higher domestic prices have been necessary to offset the cost of these tariffs, incentivising the redirection of supplies.

As a result, copper inventories have become heavily concentrated in the US. Total copper stored across the major exchanges — the London Metal Exchange, the US-based Comex and the Shanghai Futures Exchange — have risen by 54% so far this year to 661,021 tons. Within that total, stocks held on Comex have climbed to a record 405,782 tons, accounting for 61% of all exchange-held copper, compared with just 20% at the start of 2025.

Trade policy continues to be a factor shaping market expectations. Refined copper was granted an exemption from the 50% import tariffs that came into force on August 1. However, US levies on the metal remain under review, with an update expected by June. Uncertainty around the final tariff framework has added another layer of complexity to pricing and trading decisions.

Together, these elements alongside supply disruptions, investment flows and shifting trade patterns have pushed copper prices close to record territory. As analysts continue to assess deficits and policy developments, the metal has become a focal point for both industrial planning and financial markets.