Copper prices hit historic highs amid AI demand and supply shortages

Copper prices have reached historic highs, surpassing US$14,700 per tonne in September 2026. This surge is driven by a structural shift in demand, particularly from the rapid expansion of AI infrastructure. Data centers required to power AI workloads are significant consumers of copper for electrical systems, cabling, and cooling, with a single 230 MW facility requiring approximately 10,000 tonnes.

Major mining companies are pivoting to meet this demand. BHP reported that copper earnings reached US$18.2 billion in FY26, overtaking its iron ore revenue for the first time. The company has allocated over half of its growth capital expenditure to copper projects. Other firms, including Rio Tinto and Sandfire Resources, are also increasing their copper exposure.

Market analysts describe the current trend as a ‘Necessity Cycle,’ where industrial metals are viewed as critical assets for generational infrastructure transitions rather than discretionary cyclical inputs. This demand is colliding with supply constraints, including operational disruptions at major sites like Indonesia’s Grasberg mine and Chile’s El Teniente complex. These bottlenecks have led to a structural deficit and a collapse in treatment and refining charges (TC/RCs) into negative territory.