[AP]
[AP]

Copper prices have topped $14,700 a ton for the first time ever, setting new records day after day. Long-term demand from AI data centers and power grid investment is converging with mine supply disruptions in Chile and the prospect of new US tariffs.

Three-month copper futures on the London Metal Exchange surged to an intraday high of $14,779 a ton Tuesday (local time), setting a fresh all-time high, according to Bloomberg. The metal had already climbed to an intraday high of $14,533 that day, surpassing the previous record set in January and marking the second straight day of fresh highs. Copper prices have risen about 18 percent so far this year, and 47 percent over the past 12 months.

Copper is often called "Dr. Copper" for its role as a leading indicator of the global economy — prices tend to rise when production and construction pick up, and fall when a slowdown looms.

Market analysts say the recent rally cannot be explained by economic trends alone. Long-term demand is climbing as AI data centers and power grid construction expand. Supply disruptions at major mines and the possibility of a US tariff on refined copper are adding short-term upward pressure on prices.

The immediate trigger behind the latest price gains is the prospect of an expanded US tariff on refined copper imports. The US Department of Commerce has proposed imposing a 15 percent tariff on refined copper imports starting next year, rising to 30 percent in 2028. A probe report on whether to impose the tariff was due by June 30 but has been delayed for more than two months. The delay in a final decision has added to the uncertainty pushing copper prices higher.

Regional stockpile imbalances are also fueling the rally, as the US has been preemptively stockpiling copper ahead of a possible tariff, drawing inventories toward American warehouses. Copper stocks held by the Commodity Exchange, or COMEX, in the US now account for nearly 70 percent of global inventories.

"As copper has concentrated in the US ahead of the possible tariff, COMEX inventories have risen to an all-time high of 696,000 tons, while LME inventories have fallen by about 40 percent since late May," said Kim Seok-hwan, an analyst at Mirae Asset Securities.

"Unless there is a clear stance on the tariff, copper prices are likely to have room for further gains for the rest of the year," said Ok Ji-hee, an analyst at Samsung Futures.

Production setbacks in Chile, the world's largest copper producer, are also stoking concerns over supply shortages, as mine collapses and declining ore grades weigh on output.

Chile's copper exports fell to $4.63 billion in August from $5.37 billion in July, the lowest level in more than a year. Chile accounts for about a quarter of the world's mined copper output.

Morgan Stanley has also lowered its copper supply outlook. The global investment bank had expected mine output to rise this year but now projects it will be flat or slightly lower than last year. That would mark the first year-on-year decline in global copper mine production since 2017.

Market watchers point to the prospect of US tariffs and mine supply disruptions as the drivers behind the recent price surge. They expect AI data center and power infrastructure investment to lift copper demand over the medium to long term.

Copper is a core raw material used across the power industry, from generation to transmission to end consumption. Demand for the metal is surging as AI data centers proliferate and investment in renewable energy and power grids expands.

S&P Global, the US financial information firm, forecasts global copper demand will rise from 28 million tons last year to 42 million tons by 2040. Without a matching expansion in supply, the firm projects a shortfall of about 10 million tons by 2040.

"Beyond AI data centers, rising global electricity consumption is also driving copper demand," said Kang Song-chul, an analyst at Eugene Investment & Securities. "Investors can consider holding ETFs backed by physical copper and buying in installments during price pullbacks."


moon@heraldcorp.com