Copper, prized for its high electrical conductivity, is essential for power grids that supply data centers, electric vehicles and infrastructure linked to the energy transition.

Prices are up 35% so far this year and heading for their biggest annual gain since 2009, driven by mining disruptions and stockpiling in the United States.

On Friday, copper touched $11,952 a ton.

"Investors who want a broad basket of AI interests will also buy into financial products which include hard assets that feed into data centers," said Benchmark Mineral Intelligence analyst Daan de Jonge.

"Investors will buy copper-related assets such as ETFs."

In a related development, Canada’s Sprott Asset Management launched the world’s first physically backed exchange-traded copper fund in mid-2024.

The fund (COPu.TO), opens new tab, which holds nearly 10,000 tons of physical copper, has risen by almost 46% this year to nearly 14 Canadian dollars per unit.

Separately, a recent Reuters survey of analysts’ forecasts showed the copper market is expected to record a deficit of 124,000 tons this year and 150,000 tons next year.

Demand growth is being driven by billions of dollars invested globally to modernize and expand power grids.

Data centers and clean energy projects require large amounts of electricity.

Meanwhile, the energy transition, including renewable technologies such as wind and solar, is also expected to lift copper demand.

Macquarie expects global copper demand to reach 27 million tons this year, up 2.7% from 2024.

Demand in top metals consumer China is forecast to rise 3.7%.

The bank expects global demand growth outside China of 3% next year.

"Bullish sentiment is being driven by the narrative around tight supply, supported by macro news flows," said Macquarie analyst Alice Fox.

US copper prices draw global flows

Supply disruptions include an accident at Freeport McMoRan’s (FCX.N), opens new tab, giant Grasberg mine in Indonesia in September.

Miners such as Glencore (GLEN.L), opens new tab, have also cut production guidance for 2026, reinforcing expectations of constrained supply.

The total amount of copper stored in exchange warehouses, including the London Metal Exchange, US-based Comex and the Shanghai Futures Exchange, has risen 54% this year to 661,021 tons.

Since March, traders have been shipping copper to the United States due to higher prices on Comex ahead of US President Donald Trump’s planned import tariffs.

Higher prices are required to cover the cost of the import tariff.

Stocks on Comex have reached a record 405,782 tons, accounting for 61% of total exchange inventories, compared with 20% at the start of 2025.

"It feels incredibly tight because all of this material is going to the US," said BMI’s de Jonge.

Refined copper was exempted from the 50% import tariffs that took effect on August 1.

However, US levies on the metal remain under review, with an update due by June.