Copper prices have surged to unprecedented levels, with benchmark three-month copper hitting an all-time high of $11,952 per metric ton on the London Metal Exchange on Friday. Currently trading around $11,655 per ton, the red metal has climbed approximately 33% year-to-date, driven by a complex mix of US stockpiling, supply disruptions, and surging AI infrastructure demand.
The United States has been aggressively accumulating copper reserves ahead of potential tariffs, effectively removing massive volumes from the global tradable supply. According to Goldman Sachs analysts, US inventory is now “effectively ’trapped,’” creating a supply squeeze for the rest of the world. This stockpiling behavior stems from early 2025 when traders rushed copper into the US anticipating President Donald Trump’s steep import tariffs. Although the administration unexpectedly excluded refined copper from those duties, market participants remain skeptical about the longevity of this reprieve.
Goldman Sachs now expects the White House to announce a refined copper tariff in the first half of 2026 for implementation in 2027, which would likely encourage continued US stockpiling and further tighten global supplies. While the global copper market is projected to show a 300,000-ton surplus next year, Goldman anticipates a 450,000-ton deficit for the rest of the world outside the US.
Production disruptions at major mining operations in Indonesia, Congo, and Chile have compounded supply challenges in recent months. These setbacks have driven record-high premiums that producers plan to impose on European and Asian customers next year, as noted by Ewa Manthey, commodities strategist at ING.
A critical new factor driving copper prices is speculation around AI infrastructure and energy transition themes. Investors are increasingly treating copper as a tech-linked asset, piling into positions tied to data center construction to support the booming artificial intelligence industry. This AI-driven demand has added significant upside pressure to prices, though Goldman analysts warn this speculative trend leaves the market “vulnerable to a rapid reversal” if enthusiasm around data center buildouts wanes or AI stocks stumble. Goldman’s copper price forecast for 2026 stands at $11,400 per ton—slightly below current levels—suggesting potential downside risk from the speculative premium.
Key Quotes
US inventory is effectively ’trapped'
Goldman Sachs analysts described the current state of US copper stockpiles, explaining how aggressive American accumulation has removed massive volumes from global markets and created supply constraints for other countries.
The copper price rally in December is becoming highly speculative, which makes it vulnerable to a rapid reversal
Goldman Sachs analysts warned about the sustainability of current copper prices, noting that speculation around AI infrastructure and data center construction has created a premium that could quickly evaporate if market sentiment shifts.
Producers plan to impose record premiums on European and Asian customers next year, effectively compensating for profits they could earn selling to the US
Ewa Manthey, commodities strategist at ING, explained how the US stockpiling behavior is forcing copper producers to charge unprecedented premiums to non-US customers to offset the distorted global market dynamics.
Our Take
The copper market’s transformation into a proxy for AI investment sentiment represents a fascinating evolution in how technology trends influence traditional commodity markets. What’s particularly striking is the disconnect between physical fundamentals and speculative positioning—Goldman forecasts a global surplus yet prices remain at record highs, driven largely by AI infrastructure hype. This suggests markets are pricing in years of sustained data center construction, creating significant downside risk if AI capital expenditure disappoints. The situation also reveals an underappreciated constraint on AI development: physical resource availability and cost. As companies rush to build computing infrastructure, they’re competing not just for chips and talent, but for basic materials like copper. This could become a meaningful bottleneck for AI deployment, particularly if tariff policies fragment supply chains further. The market’s vulnerability to AI sentiment shifts makes copper an interesting bellwether for broader confidence in the AI buildout.
Why This Matters
This story highlights how AI infrastructure development is fundamentally reshaping commodity markets, extending the technology’s economic impact far beyond software and chips. The surge in copper demand driven by data center construction demonstrates the massive physical infrastructure requirements underlying the AI revolution. As tech giants race to build computing capacity for AI models, they’re creating unprecedented demand for the electrical wiring, cooling systems, and power infrastructure that rely heavily on copper.
The speculative premium now embedded in copper prices reveals how financial markets are pricing in years of AI-driven growth, making the metal vulnerable to corrections if AI investment slows. This creates ripple effects across industries—from construction to electronics manufacturing—that depend on stable copper supplies and prices. The situation also illustrates how geopolitical factors like US tariff policy intersect with technological trends, potentially fragmenting global supply chains. For businesses planning AI infrastructure investments, rising copper costs could significantly impact project economics and deployment timelines, potentially slowing the pace of AI adoption.