Copper prices rise to record highs on AI demand
Copper prices continue to rise and are hitting new highs thanks to sharply increasing demand from AI data centres, and analysts at Citi believe this upward trend is likely to continue.
Data show a substantial rise in copper futures. July-dated futures rose by 1.09% on Tuesday, closing at $6.531 per pound. That amounts to an increase of 14.9% since the start of the year and 7.8% since the start of the conflict in Iran. Copper trading on the London Metal Exchange mirrored this trend, closing at a record high of $14,021 per tonne, up 0.56%.
Citi strategist Charlie Massy-Collier attributes the rise mainly to demand from AI data centres and energy transition initiatives. He notes that these sectors have driven virtually all growth in copper demand since 2022. In addition, strategic stockpiling is emerging as a new driver of demand growth.
Massy-Collier suggested that copper’s recent break above $13,500 points to an improving macroeconomic backdrop that could push prices even higher. This bullish forecast projects a price of $15,000 per tonne, about 7% above Tuesday’s closing level.
Massy-Collier acknowledged that he had previously been reluctant to recommend buying copper because of the strong resistance observed at the $13,500-level. He said this resistance was due to a significant build-up in global visible inventories in the first quarter, indicating physical resistance to price increases despite a favourable macroeconomic environment.
For Massy-Collier, the recent break through the $13,500 threshold suggests that both structural and cyclical demand drivers are robust, strengthening his confidence in further price gains.
To capitalise on this outlook, Massy-Collier advises buying a digital LME copper call option with a strike price of $15,250, expiring on 5 August.
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