In 2025, precious metals are in a bull market, but copper has stolen the spotlight. The “Doctor Copper”—traditionally sensitive to economic swings—has defied expectations, soaring despite global PMIs lingering near the neutral line.
Explosive Demand Meets Tight Supply
COMEX inventories in the U.S. have surged 330% year-to-date, hitting a 22-year high. Meanwhile, Asia and Europe face severe shortages, with LME stocks below 130,000 tons and Singapore warehouses experiencing “pick-up-empty” phenomena.
Copper demand is driven by the AI revolution. AI data centers require far higher power densities than traditional servers, boosting copper demand for power transmission and liquid cooling. One AI server uses 8 times the PCB copper of a conventional server; with global AI server shipments expected at 2.1 million units, high-end copper foil demand exceeds 50,000 tons. Mega AI data centers can consume up to 50,000 tons—equivalent to the total copper usage of 100,000 EVs.
On the supply side, global ore grades have fallen to 0.6%, raising production costs to $8,000–12,000/ton. Traditional mines are depleting, and major sites in Peru, Chile, and the DRC face accidents, protests, or logistical disruptions, intensifying global shortages.
Speculative Frenzy and Short Squeeze
U.S. AI data center demand has driven traders to hoard copper, creating extreme inventory imbalances: the U.S., consuming 7% of global copper, holds 60% of exchange stocks; LME inventories dropped 42%, Shanghai futures hover near critical levels. Hedge funds exploited this via “buy COMEX + sell LME” arbitrage, pushing COMEX prices $3,000/ton above LME, with net non-commercial longs at three-year highs. Giants like Bridgewater and Quantum Fund hold over 30%.
The short squeeze carries risk: LME stock is only 130,000 tons, yet open shorts total 250,000 tons. Shipping COMEX copper to LME incurs 50% tariffs, and leasing copper costs $5/ton/day. Ultimately, end consumers and industries shoulder the cost of this speculative mania.
Epilogue: Fundamentals Meet Bubble
Copper’s rise reflects both genuine demand and speculative frenzy. U.S. manufacturing PMI has fallen for three consecutive months, and surging copper prices are constraining industrial recovery. EVs and data centers face skyrocketing costs, delaying projects.
Goldman Sachs expects the U.S. to digest new COMEX stocks over 4–5 months, with Q2 2026 inventory returning to 150,000 tons and spreads narrowing to $500. Morgan Stanley warns that a 600,000-ton global refined copper deficit could sustain prices above $10,000/ton, risking another squeeze. With interventions from the ECB and Japan, the copper market remains in a highly volatile and complex phase.
