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Investors looking for exposure to AI buy copper

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Sprott's copper ETF prices up 46% so far this year

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US copper prices attract shipments

By Polina Devitt and Pratima Desai

LONDON, Dec 12 (Reuters) - Copper is closing in on the

$12,000 a metric ton mark as expectations of soaring demand from

data centres that power artificial intelligence and tight

supplies collide with shortages outside the United States.

Valued for its exceptional electrical conductivity, copper

wiring is vital in power grids that feed data centres, electric

vehicles and the infrastructure needed for the energy

transition.

Copper prices are up 35% so far this year and

heading for their largest gain since 2009, due to mining

disruptions and stockpiling in the U.S. On Friday, they 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 centres," said Benchmark Mineral Intelligence analyst

Daan de Jonge. "Investors will buy copper-related assets such as

ETFs."

Canada's Sprott Asset Management launched the world's first

physically backed exchange-traded copper fund in mid-2024. The

fund, which holds nearly 10,000 tons of physical

copper, has shot up by almost 46% this year to nearly 14

Canadian dollars per unit.

A recent Reuters survey of analysts' forecasts shows the

copper market will see a deficit of 124,000 tons this year and

150,000 tons next year.

Copper demand growth is being driven by billions of dollars

being invested worldwide to modernise and expand power grids.

Data centres and clean energy require vast amounts of

electricity.

The energy transition, which includes renewable energy

technology such as wind and solar, is also expected to boost

copper demand.

Macquarie expects global copper demand at 27 million tons

this year, up 2.7% from 2024, with demand in top metals consumer

China rising 3.7%. It forecasts global demand growth outside

China at 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 A MAGNET FOR TRADERS

Supply disruptions include an accident at Freeport

McMoRan's ( FCX ) giant Grasberg mine in Indonesia in September,

while miners such as Glencore ( GLCNF ) have cut production

guidance for 2026, reinforcing expectations of tight supplies.

The overall amount of copper stored in exchange warehouses -

the London Metal Exchange , U.S.-based Comex

and the Shanghai Futures Exchange -

is up 54% so far this year at 661,021 tons.

Traders have been shipping copper to the United States since

March due to higher prices on Comex ahead of U.S. President

Donald Trump's planned import tariffs. Higher prices are needed

to cover the import tariff.

Stocks on Comex at a record high of 405,782 tons amount to

61% of total exchange stocks versus 20% at the start of 2025.

"It feels incredibly tight because all of this material is

going to the U.S.," said BMI's de Jonge.

Refined copper was given an exemption from the 50% import

tariffs that came into force on August 1, but U.S. levies on the

metal remain under review with an update due by June.