As we’ve previously discussed, surging copper demand often signals robust economic health. Right now, that demand is being driven by two major forces: an AI arms race fuelling data centre expansion and the build-out of grid infrastructure for the sustainable energy transition.
Copper bulls shouldn’t get complacent, though. Goldman Sachs cautions that “most of the recent copper price increase is based on expectation of future market tightness, rather than current fundamentals,” adding they don’t expect current highs to last. Investor sentiment is also being shaped by concerns over potential new US tariffs.
Political economy of copper
The elevated price raises key questions. Bullishness is tied to renewable energy investment and apparently insatiable energy needs from AI data centres. Yet the pace of green investment depends on complex political, logistical, and technological hurdles. And the real uncertainty may lie in whether today’s AI infrastructure boom is sustainable. Consider, for instance, GQG Partners’ uncompromising assessment, comparing the current moment to “Dotcom on Steroids.”
For miners, the bullish case rests on constrained production unlocking future supply. As Bloomberg’s Javier Blas notes, commodity giant Glencore has repeatedly missed copper targets, but “as long as the red metal’s value remains high, the company says its copper business can self-fund new mines and infrastructure.”
Finally, US trade policy looms large. Tariffs could directly hit copper prices and supply, while also influencing broader economic growth, and, by extension, demand.
Ultimately, the big question for copper is whether the great transformative investment opportunities of today translate into real structural benefits.
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