Most investors are well aware that the gold price has repeatedly climbed to new all-time highs this year. The silver price has also risen sharply since the beginning of September, which is why silver is also receiving a lot of attention these days. However, many investors are not aware that copper is also currently in rally mode.
With an increase of around 32 percent since the beginning of January, copper is undoubtedly one of the best investments of 2025. The copper price is now trading above US$11,700 per tonne again and reached new all-time highs in the summer. Following the current annual and all-time high, however, prices fell significantly again.
Although the red metal has long since recovered from the lows reached in August and fought its way back up, many investors seem to have overlooked this increase. The increase observed since the beginning of the year is not a short-term, wild speculation, but the expression of a deep structural change.
The basis for a major rally in the copper sector has been laid
The copper price is therefore not rising because speculative investors are boldly seizing the opportunity and seeing the potential for high profits, but because a profound structural shift is taking place on the copper market, triggered, among other things, by the AI revolution. This aspect is important because speculative movements can quickly exhaust themselves and then collapse powerlessly.
However, if a price movement on the commodity markets is primarily based on fundamental relationships, it can be assumed that its drivers will persist for a certain period of time because it will not be possible, even with the greatest efforts, to eliminate the reasons for the existing structural imbalance between supply and demand virtually overnight.
This in turn suggests that a quick end to this copper rally is not to be expected. Rather, it must be assumed that the situation on the copper market will remain tense for quite some time. Investors who have not yet positioned themselves in this sector are by no means too late, but still have the opportunity to profit from this initially overlooked opportunity.
The AI revolution is reshuffling the cards on the copper market
Many investors are aware that copper is one of the most important metals for the energy transition. It relies on electricity in many areas and copper cables are essential to make this available where it is needed. However, many investors are not aware that this connection also applies to the large data centers without which many AI applications would not be possible at all.
A characteristic of the AI boom is the massive expansion of large data centers. It is not just classic data centers that are needed, which require between 5,000 and 10,000 tonnes of copper for their construction and operation, but modern hyperscaler and AI data centers. Their copper requirements can increase to up to 50,000 tonnes of copper for one plant. A modern AI data center can therefore easily require more copper than several conventional data centers combined.
Existing data centers already require 1.5 percent of total global electricity generation. This share will more than double in the coming years. Enormous efforts and a great deal of copper are therefore essential for the construction of these plants. The copper in them is needed, among other things, for cooling, for grid connections and storage solutions, but also for transformers and the many power lines that are laid between them.
The demand for copper is high and inelastic
Against the background of this enormous demand, the question immediately arises as to whether the copper required could not be replaced by other, cheaper alternatives. However, the answer is negative and this in several respects. Technically, copper could be replaced by better conductors such as silver, for example. However, this also has a much higher price.
Although silver would be the better conductor, its price is in a completely different region and is therefore almost unaffordable for most applications. In addition, the pure copper costs are extremely low within the total costs that have to be borne for the construction of a large AI data center. The projects will certainly not fail because of them, as the copper costs only account for 1 percent of the total construction costs.
If the copper price rises from currently over US$11,000 per tonne to, for example, US$20,000/tonne in the coming years, not a single data center operator will consider foregoing copper. The demand for copper from data centers is therefore extremely stable and inelastic. Or to put it another way: there is no way around copper when building modern data centers.
It is already becoming clear that the situation on the global copper market will not only be tense in the short term, but for years to come. What will worry copper buyers is an opportunity for far-sighted investors. Many copper projects and the shares of the development companies are still available at prices that are cheap in many places and even ridiculously low in some.
Mine developers and copper explorers such as American West Metals, Algo Grande Copper, Axo Copper, Brixton Metals or PTX Metals and Prismo Metals could, if they continue their projects successfully, have good medium to long-term opportunities to benefit greatly from the ongoing copper rally.
