Copper prices are gaining support from artificial intelligence (AI) infrastructure, rising electricity demand and growing concerns about mine supply, according to CarbonCredits.com. The metal plays a central role in data centers, power grids, transformers and electrical equipment needed to expand AI computing capacity. On October 27, benchmark three-month copper on the London Metal Exchange (LME) rose 1.1% to $14,487.50 per metric ton, its highest level since October 16, according to Reuters.
Improving sentiment around AI stocks and stronger demand signals from China supported the rebound. The LME's official pricing data showed cash copper bid and ask prices of $14,733 and $14,735 per metric ton, respectively, on October 28. The three-month contract stood at $14,655 bid and $14,658 ask.
The source notes that these official prices differ from Reuters' October 27 intraday quotation. S&P Global reported during LME Week that the metal's average price reached $13,395 per metric ton in 2026, about 35% above its 2025 average. Mine disruptions, lower ore grades and delays in developing new projects have added pressure to the market.
However, the source notes that high prices can discourage purchases by manufacturers, encourage substitution with aluminium and increase incentives to recycle scrap copper. The market must therefore balance rising demand for electricity infrastructure against the risk that elevated prices reduce consumption in more price-sensitive industries. AI data centers are emerging as a new source of copper demand.
Operators need the metal for power cables, transformers, electrical distribution systems, cooling equipment and backup power systems, as well as for the grid connections that larger facilities require. Bloomberg reported on October 20 an estimate from commodity trader Trafigura that copper consumption associated with AI infrastructure could reach 2.5 million to 3 million metric tons in 2028, compared with an estimated 1 million tons in 2026, if hyperscalers deliver their announced investment plans. Trafigura stressed that this was an implied outcome rather than its base-case forecast.
The actual increase will depend on how quickly companies complete their projects and connect new data centers to electricity grids. AI-related demand also competes with established users such as electric vehicles, renewable energy installations, transmission networks and industrial equipment. The International Energy Agency (IEA) sees copper as one of the most important minerals for the energy transition and emerging technologies.
Its Global Critical Minerals Outlook 2026 projects that copper demand will increase by approximately 7 million metric tons between the present and 2040, with electricity networks and next-generation technologies driving much of that growth. Under the IEA's base-case Stated Policies Scenario, expected supply from existing and announced projects would cover only about 75% of primary copper supply requirements in 2035, implying a potential supply gap of around 25%. The IEA describes this as a projection rather than a confirmed current shortage.
The outlook has improved from its previous assessment, which projected a gap of around 30%, with new projects in the Democratic Republic of the Congo (DRC) and Zambia helping to narrow the expected shortfall. The remaining gap, however, suggests the market will need production beyond the projects currently announced. Developing a new copper mine requires exploration, feasibility studies, permits, infrastructure and substantial capital, so higher prices cannot bring large volumes online immediately.
Production challenges are already affecting the market. S&P Global reported during LME Week that copper output from the 20 largest producers fell 2.5% year over year in the first half of 2026, to about 7 million metric tons. Lower ore grades, maintenance and operational issues at major mines drove the decline.
Chile, the world's leading copper-producing country, remains central to the supply outlook, while Indonesia matters because disruptions at major operations can remove significant volumes from the global market. The industry also faces a shortage of readily available copper concentrate. The IEA reported that benchmark annual smelting and refining treatment charges for 2026 settled at zero, reflecting intense competition among smelters for raw materials, and that spot charges have also remained negative.
Higher copper prices therefore do not automatically translate into higher refined production, since miners must deliver enough concentrate and smelters need viable economics to process it. The outlook remains positive over the long term, but investors should not treat every AI demand estimate as a certainty. At LME Week, market experts warned that some projections for data-center copper consumption could be overstated and highlighted the possibility of aluminium replacing copper in certain applications as manufacturers seek to control costs.
China's economic performance is another key factor. The country remains a major copper consumer, and weaker industrial activity could offset part of the growth generated by AI infrastructure. Higher prices could also lead manufacturers to delay purchases or draw on existing inventories.
According to the source, the key indicators for investors include LME copper prices and warehouse inventories, quarterly mine production from major producers, new mine approvals, project delays and revised production guidance, AI data-center investment and grid expansion, and Chinese manufacturing activity and copper import demand. Copper's recent rally reflects more than enthusiasm about AI. The metal benefits from several structural demand drivers, including electrification, grid upgrades, renewable power and electric vehicles.
The IEA's projected 25% supply gap by 2035 strengthens the case for investment in new mines, mine expansions and recycling capacity. The agency also reported that copper-focused companies increased capital spending by 8% in 2025, even as overall investment in critical minerals declined. Project delays, lower ore grades and rising production costs remain obstacles, and the actual impact of AI demand will depend on how much announced infrastructure reaches completion.
For now, copper has a strong long-term demand story, while near-term prices remain sensitive to Chinese consumption, mine disruptions and market positioning. The strongest investment case will emerge if physical demand continues to grow while new supply struggles to keep pace. Sources: LME official pricing data; Reuters (October 27 intraday quotation); S&P Global (LME Week reporting); Bloomberg (October 20 report on Trafigura estimate); International Energy Agency, Global Critical Minerals Outlook 2026; CarbonCredits.com.
Source: carboncredits.com