Copper prices are rebounding amid global market instability, with hotter temperatures and surging power demand for cooling and data centres expected to accelerate long-term demand for the metal.
Following a sharp drop in early April, copper prices have staged a strong comeback, rising by more than 12 per cent to $US4.70 ($7.27) per pound in the past month.
A key driver of this surge is the widening gap between the US and global copper prices due to anticipated US import tariffs, which has triggered record warehouse withdrawals in Europe and Asia.
But while short-term market forces dominate headlines, longer-term fundamentals paint a bullish picture for copper, particularly as rising global temperatures and the clean energy transition increase demand.
“Rising global temperatures are increasing the demand for cooling technologies, such as air conditioning – with the recent heatwave across the Southern Hemisphere a stark reminder,” Saxo Bank head of commodity strategy Ole Hansen said.
“Together with growing power demand from data centres handling AI and cloud computing, and industrial electrification, these developments will further boost power consumption.”
That increased power demand plays directly into copper’s strength, with the metal’s excellent electrical conductivity making it essential for efficient power transmission and distribution, especially as nations integrate more renewable energy into their grids.
According to the International Energy Forum, the world will need to mine 115 per cent more copper over the next 30 years than has been mined in all of history to meet electrification goals.
Despite this, supply remains tight as global inventories are being depleting quickly, with Shanghai warehouse stocks plunging by 55,000 tonnes which is the biggest weekly drop on record.
Commodities trading house Mercuria recently told The Financial Times that China’s stockpiles could run out in just a few months.
“The market is undergoing ‘one of the greatest tightening shocks’ in its history due to fears of US tariffs,” Hansen said.
“While mining companies extracting precious metals – especially gold – have seen strong year-on-year gains … copper-focused miners have experienced more muted performance, given the aforementioned challenges.
“However, with demand and prices expected to remain robust despite current global growth worries, the sector probably deserves renewed attention – or at least a place on the radar for potential investment.”
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