Copper has reached a new nominal record, with prices also approaching a 15-year high in constant dollar terms and nearing the 2011 peak, according to Kyle Dahms of National Bank of Canada (NBC) [1]. The rally in copper prices is attributed to several factors: robust demand from AI-related data centre construction, expansion of electricity grids, tariff-driven stockpiling, and ongoing supply disruptions [1]. These dynamics have amplified recent gains and are raising costs for power grids, AI infrastructure, and broader electrification projects [1].
A notable supply-side constraint is the severe curtailment of sulphur shipments through the Strait of Hormuz, which has pushed sulphur prices to more than double their level at the start of the year [1]. This is significant because sulphur is a key feedstock for sulphuric acid, essential in certain copper processing methods [1]. The resulting supply chain pressures are contributing to the elevated copper prices [1].
NBC notes that if copper surpasses its 2011 peak, the real price would reach its highest level since the mid-1970s, underscoring the magnitude of the current rally [1]. The bank also highlights that these higher prices effectively act as a tax on investments intended to support future growth, particularly in power grids, AI data centres, and other electrification projects, at a time when geopolitical fragmentation is making supply less reliable [1].
CONCLUSION
Copper's surge to near-record highs is being driven by strong demand from AI and electrification projects, compounded by supply disruptions and rising input costs. These elevated prices are increasing the cost of critical infrastructure investments and highlight growing supply chain vulnerabilities.