AI optimism is now copper's biggest driver: Chart of the Day

AI optimism is now copper's biggest driver: Chart of the Day Jake Conley · Breaking Business News Reporter Mon, July 20, 2026 at 7:38 PM GMT+2 3 min read HG=F Once viewed primarily as a barometer of global manufacturing, copper prices are increasingly moving on expectations that the AI boom will fuel years of investment in data centers, electric grids, and power infrastructure. While data centers account for only 1% of global copper demand today, Goldman argues investors are increasingly pricing the metal based on expectations for the AI boom — including years of expected spending on data centers, power grids, transformers and transmission infrastructure rather than current consumption alone. "AI has become a key narrative shaping expectations for future power, grid and copper demand," Goldman Sachs commodities strategists led by Lavinia Forcellese wrote on Monday.

AI expectations have become an increasingly important driver of copper prices, according to Goldman Sachs. Chart: Goldman Sachs · Goldman Sachs Copper is used throughout the AI ecosystem, from the miles of electrical wiring inside data centers to the transformers, switchgear, and high-voltage transmission lines needed to deliver power to the infrastructure underpinning the AI build-out. Goldman argues those future infrastructure needs — not today's physical demand — are becoming an increasingly important force in copper markets.

In the bank's model, AI-related expectations have overtaken more traditional drivers such as China's growth outlook, moves in the US dollar, and physical market tightness as the largest contributor to copper's cumulative price gains since early 2025. That said, those traditional demand drivers haven't disappeared. China remains the world's largest consumer of the metal, accounting for roughly half of global demand, and the nation's construction and manufacturing sectors play an outsized role in determining prices.

But investors are increasingly looking toward the enormous amount of electrical infrastructure expected to be built over the coming decade. Big Tech giants — particularly the hyperscalers Microsoft ( MSFT ), Meta ( META ), Amazon ( AMZN ), and Alphabet ( GOOG ) — have pledged hundreds of billions of dollars toward AI infrastructure, while utilities around the world race to expand generation and transmission networks to meet the surge in electricity demand. The US could face an electricity generation shortfall of 100 gigawatts between 2026 and 2030, according to Bank of America, driven in part by booming chip production and demand as well as US utilities' inability to meet the moment.

Between 2026 and 2030, electrical capacity demand is expected to reach 230 gigawatts or more. At the same time, the physical copper market has continued to tighten. Visible Chinese copper inventories have fallen toward the bottom of their seasonal range, while tighter enforcement of scrap regulations has pushed manufacturers toward refined copper.

Smelter maintenance has also constrained cathode output, leaving the market with relatively little inventory cushion. Story Continues The Trump administration's tariff regime has also reshaped copper flows. Anticipation of potential levies on refined copper imports in 2025 pulled the metal into the US in dramatic fashion, draining inventories elsewhere and sending prices soaring.

Futures markets are pricing in roughly a 30% probability of a 15% tariff on refined copper from the White House by January 2027, per Goldman. The global copper mining sector has also faced a bevy of severe disruptions in the past year, as noted by Jefferies analysts Christopher LaFemina and Patricia Hove. Aerial view of a mining site in Kolwezi, in the southeastern part of the Democratic Republic of the Congo, on May 22, 2026.

(Photo by GLODY MURHABAZI / AFP via Getty Images) · GLODY MURHABAZI via Getty Images The continued shuttering of the Cobre Panamá mine in Panama by government order has kept roughly 330,000–350,000 metric tons annually, or 1. 5% of world supply, offline, and shortages of sulfuric acid, a side effect of the war in Iran, have forced global smelters to curtail production. Major seismic activity at Ivanhoe Mines' ( IVN.

TO ) Kamoa-Kakula complex in the Democratic Republic of Congo in 2025 has continued to disrupt one of the world's fastest-growing copper projects. "Copper mine supply disruptions have been severe in recent months, and we expect supply growth to be slow, due to depletion and grade declines, among other factors," LaFemina and Hove wrote. "We continue to be bullish, given growing global demand and serious supply constraints.

" Jake Conley is a breaking news reporter covering US equities for Yahoo Finance. Follow him on X at @byjakeconley or email him at jake. conley@yahooinc.

com .