[AP]
[AP]

International copper prices have surged about 47 percent over the past year, setting a new all-time high. That pace outstrips gold, which rose about 20 percent over the same period. Demand growth tied to AI data center and power grid investment is pushing copper prices higher. That effect is compounded by the possibility of additional US tariffs and production disruptions at major mines.

According to Bloomberg on Monday (local time), the benchmark three-month copper contract on the London Metal Exchange rose 0.8 percent during trading to $14,533 per ton. That marked an all-time high, surpassing the previous record of $14,527.50 set in January. Copper has risen about 16 to 17 percent so far this year and about 47 percent over the past 12 months.

Gold prices rose in the 20 percent range over the same period. Gold, too, has held at elevated levels on the back of geopolitical uncertainty and central bank buying. But copper's price gain over the past year has been roughly twice as large. Copper is standing out not merely as an industrial raw material but as one of the most notable performers among major investment assets.

AI, power grids devour copper as mine supply stalls

Structural demand growth underpins copper's long-term strength.

Copper's high electrical conductivity gives it broad industrial use across wiring, power grids, semiconductors, batteries, electric vehicles and renewable energy equipment. The rapid expansion of AI data centers, which consume vast amounts of power, has strengthened expectations that copper demand will also rise. That demand covers transmission and distribution networks as well as cooling and power equipment.

Mine supply, however, is struggling to keep pace with the expansion in demand. Existing large mines are aging and ore grades are declining, while developing new mines and bringing them into actual production takes a long time.

According to the International Copper Study Group, global copper mine output fell 1.1 percent year-on-year in the first half of this year, and copper concentrate production dropped 2.6 percent. Disruptions in major producing countries including Chile, Indonesia and the Democratic Republic of the Congo weighed on output.

Chile's slump, in particular, stands out, given the country is the world's largest copper producer. Chile faced declining ore grades and disruptions to mine operations, compounded by severe winter weather including heavy rain and snow. Copper output in July fell 9.4 percent from a year earlier, dropping to its lowest level for the month since 2011.

Copper exports last month totaled $4.62 billion, down 14 percent from the previous month and the lowest level since July 2025. Export revenue fell even as prices rose more than 40 percent from a year earlier, underscoring how weak actual supply volumes were.

Buy before tariffs hit: copper floods into the US

However, analysts say the direct driver that pushed prices to an all-time high in recent weeks has been US tariff uncertainty rather than AI-driven demand.

With the possibility that the US could impose additional tariffs on refined copper, traders have been moving copper into the US ahead of any such measures.

The US Department of Commerce was required to submit a report to the White House by the end of June on the need for additional tariffs on refined copper. But the final decision has not been disclosed for more than two months. As uncertainty over tariffs persists, shipments aimed at capturing higher US prices have continued.

As a result, inventories at the Commodity Exchange, or Comex, have jumped more than eightfold, from about 80,000 tons in February 2025 to 695,624 tons recently. As copper is drawn into the US, the volume available for immediate trading in markets outside the country has shrunk, pushing prices higher.

"The possibility of tariffs is having a bigger impact on trading than an actual excess in final demand," said Cristian Sifuentes, chief analyst at the Chilean Copper and Mining Research Center, or Cesco. "This is more a case of localized shortages than a global demand surplus."

In fact, the global copper market is not currently in a state of complete supply shortage. While mine production fell, refined copper output rose 2.4 percent in the first half of this year, outpacing growth in consumption and producing a supply surplus of about 131,000 tons.

In other words, today's record-high price is less the result of a single cause — an absolute global shortage of copper. It stems instead from the combined effect of weak mine supply, expectations of long-term demand growth, and US stockpiling ahead of possible tariffs.

How high can 'Dr. Copper' climb? Tariffs, Chile output hold the key

The US tariff decision will be the first factor shaping the direction of prices going forward. If tariffs are actually imposed, the price gap between the US and other regions could widen further. But resolving the uncertainty could also change the flow of volumes that have been concentrated in the US.

Whether Chile and other major producers recover is also important. Chile accounts for about a quarter of the world's mined copper, so a prolonged production slump there could tighten global supply further. Bloomberg said that if Chilean output fails to rebound in the second half of the year, global copper mine supply could fall year-on-year for the first time since 2017.

On the other hand, the burden of the sharp short-term price surge has also grown. If copper prices rise too high, cost burdens for power grid, electric vehicle and construction companies will increase. Some demand could then be delayed or shift toward substitutes such as aluminum.

Even so, the market's long-term view of copper remains strong. As existing mines struggle to expand production, AI data centers, power grid modernization, and electric vehicle and renewable energy equipment are all requiring copper at the same time.

Copper, often called "Dr. Copper" for its sensitivity to economic trends, has this time climbed past its all-time high at a faster pace than gold. Going forward, the key question is whether the structural rise in demand driven by AI and power grids will translate into an actual supply shortage. Alternatively, the volumes currently concentrated in the US could be redistributed once tariff uncertainty is resolved.


rainbow@heraldcorp.com