AI data centers lift copper to record; charts and hedgers warn

Copper reached a record near $6.63 per pound on June 2 as demand tied to AI data center construction rose sharply. Prices have fallen to about $6.27, down roughly 6% from the peak, with a double-top on the price chart, a stronger U.S. dollar and large net short positions by commercial hedgers noted as cautionary signs.

Demand from hyperscale AI facilities has been a major factor. Industry estimates indicate a single AI data center can require up to 50,000 tons of copper, compared with 5,000 to 15,000 tons for a conventional data center. Several banks estimate the data-center sector will need roughly 475,000 tons of copper this year.

Supply forecasts signal a widening gap between production and demand. One major industry projection anticipates global copper demand rising from about 28 million tonnes today to near 42 million tonnes by 2040, producing a potential shortfall of about 10 million tonnes by that year.

Nvidia chief executive Jensen Huang described copper as the dominant material for chip interconnects “for as long as possible before any shift to optics,” linking semiconductor supply-chain needs to the metal’s industrial demand.

Technical indicators have shown a double-top pattern around the record level after two failed attempts to clear the same resistance. At the same time, the U.S. Dollar Index has strengthened and market yields have risen, factors that make dollar-priced copper more expensive for holders of other currencies and can weigh on demand.

Market positioning shows a split between options traders and futures-market participants. On the United States Copper Index Fund (CPER), the put-call ratio fell to about 0.11 from 0.27 at the June 2 high, indicating heavy call buying in options. The Commitments of Traders report for futures shows commercial hedgers are heavily net short and reduced long positions by 3,254 contracts, while non-commercial speculators hold about 111,525 long contracts versus 32,692 short and added roughly 5,852 long contracts into the highs.

A proprietary Copper-Gold Rotation Index used by some market watchers sits near 1.23 and has risen alongside price. That gauge compares investor preference for growth-sensitive copper versus safe-haven gold; it fell at copper’s January peak and preceded a correction, while its current rise accompanies the recent price gains.

Price moves have been substantial: copper was up roughly 75% since October 2023 and more than 40% over the prior 12 months at its recent peak. Market watchers will be monitoring whether prices clear the double-top, whether the dollar and yields continue to strengthen, and whether commercial hedgers begin to cover short positions. Long-term consumption tied to AI data centers and electrification continues to be cited as a structural influence on copper demand.