Key facts
- Copper prices are nearing nickel's levels due to increased demand from AI and EV sectors.
- Tightening global copper supply and potential U.S. tariffs are contributing to record-high prices.
- Copper futures reached a record $6.89 per pound in New York and near $14,780 per ton in London.
- Global copper mine output declined 1.1% in the first half of 2026, with Chile's output down 6.6%.
- The cost of copper wire and cable rose 18% year-over-year in July.
- AI data center demand is projected to increase significantly by 2040.
International copper prices are nearing record highs, potentially converging with nickel prices, driven by robust demand from the artificial intelligence boom and electric vehicle manufacturing. This surge is occurring despite nickel prices being soft, a situation described as 'previously unimaginable' by some market observers.
Copper futures in New York reached a record $6.89 per pound on Wednesday, while London Metal Exchange contracts traded near $14,680 per ton, a nearly 50% increase from September 2025. This rally has significantly outperformed gold over the same period.
The demand for copper is fueled by its critical role in AI data center infrastructure and the energy transition, including EV manufacturing and solar power installations. S&P Global Ratings estimates that solar-related demand could reach 1.1 million tons annually, and grid expansion is projected to double transmission-grid copper demand by 2040. Data center copper demand is also expected to rise from 1.1 million tons in 2025 to 2.5 million tons by 2040.
However, global copper mine output declined by 1.1% in the first half of 2026, according to preliminary data from the International Copper Study Group. Chile, the world's largest producer, saw a 6.6% decrease in output during the same period, attributed to poor weather and deteriorating mine quality. While there is a surplus of refined copper, concerns about mine production are tightening supply.
Uncertainty over potential U.S. tariffs, including a possible 15% tariff on refined copper products, is also a significant factor. Traders have been stockpiling copper to hedge against these potential trade barriers, draining global inventories and driving up prices. Edward Meir, a commodity analyst at Marex, noted a "mad rush" to secure metal ahead of possible tariffs.
The rising cost of copper is impacting businesses, with the price of copper wire and cable increasing by approximately 18% year-over-year in July. Despite the price surge, AI projects are relatively insensitive to copper costs, accounting for less than 5% of a data center's capital spending even at $15,000 per ton.