Tight supply, AI demand propel copper towards $12,000

Copper is closing in on the $12,000 a metric ton mark as expectations of soaring demand from data centres that power artificial intelligence and tight supplies collide with shortages outside the United States.

Valued for its exceptional electrical conductivity, copper wiring is vital in power grids that feed data centres, electric vehicles and the infrastructure needed for the energy transition.

Copper prices are up 35 percent so far this year and heading for their largest gain since 2009, due to mining disruptions and stockpiling in the US On Friday, they touched $11,952 a ton.

"Investors who want a broad basket of AI interests will also buy into financial products which include hard assets that feed into data centres," said Benchmark Mineral Intelligence analyst Daan de Jonge. "Investors will buy copper-related assets such as ETFs."

Canada's Sprott Asset Management launched the world's first physically backed exchange-traded copper fund in mid-2024.

The fund, which holds nearly 10,000 tons of physical copper, has shot up by almost 46 percent this year to nearly 14 Canadian dollars per unit.

A recent Reuters survey of analysts' forecasts shows the copper market will see a deficit of 124,000 tons this year and 150,000 tons next year.