The growing demand for copper driven by AI’s need for data center power

The demand for copper is skyrocketing as the world races to meet the growing needs of artificial intelligence (AI) data centers. With AI technology becoming increasingly prevalent, the reliance on copper wiring in data centers is driving up the price of the metal. Since the start of the year, copper prices have climbed by about 20%, reaching $4.65 per pound as of Friday.

Bank of America analysts are predicting that global demand for copper could lead to a supply deficit by the end of the year. The surge in copper prices comes on the heels of a doubling in value following the COVID-19 pandemic, driven by the demand for electric vehicles. Now, as the focus shifts to AI capabilities, the need for copper in data centers is propelling prices even higher.

The International Energy Agency (IEA) has projected that electricity consumption from data centers, AI, and the cryptocurrency sector could double by 2026, putting further strain on the global copper supply. Grid upgrades, renewable energy solutions, and technological improvements are all adding to the demand for copper, which is essential in these developments.

China, a key player in the global copper market, has curtailed production due to mine supply constraints while also investing heavily in grid upgrades. How China navigates its production and renewable energy spending will have a significant impact on the future of copper prices. Bank of America estimates that copper prices could reach $5.44 per pound by 2026, a 41% increase from last year.

As the world increasingly relies on AI technology and the data centers that fuel it, the demand for copper is set to continue rising, potentially leading to a significant supply deficit and even higher prices in the coming years.