Copper has surged to record highs, but while its widespread use across industries has traditionally made the metal a reliable indicator of economic health, the forces driving its price today tell a more complicated story.

Two major themes in today’s macro economy have bolstered the demand for copper. Artificial intelligence data centers require massive amounts of copper for wiring, cables and cooling equipment. Renewable energy equipment development and electric vehicles have also supported stronger demand. In fact, the IEA projects a supply deficit of 30% by 2035 based on the current project pipeline. However, copper’s more recent highs have also been supported by a few other variables.

Copper Prices over the Past 5 Years

On the supply side, supply remains tight amid limited mine growth and disruptions at existing operations. Heavy snowfall and flooding have temporarily halted major copper operations in Chile, the world’s largest copper exporter. The Democratic Republic of Congo has restricted exports of copper and copper concentrate in an effort to retain more domestic value from it’s mineral resources. Smelters in China have been facing growing challenges as raw material supplies tighten and processing fees fall to record lows.

Demand has been unusually strong as many US companies have begun to store record amounts of copper in warehouses in anticipation of raw copper import tariffs. While a 50% tariff was applied to semi-finished copper products, raw and refined copper were exempted from the import tariffs in 2025. Further tariffs are widely anticipated by the market.

Will the current supply and demand constraints have a long term impact on AI and the ESG/renewable energy story?