Copper has outperformed gold so far this year, and investors point to demand from artificial intelligence infrastructure, power-grid construction and defense budgets as reasons the rally can hold even if technology valuations keep falling, CNBC reported on Tuesday as LME Week opened in London.
The industrial metal has climbed 15.8% year to date and is more than 30% higher over the past 12 months, according to CNBC. Gold futures, by contrast, have dropped 4.11% this year and 4.52% over 12 months, while spot gold is down 4.89% over the year and 4% year to date.
Why it matters
Copper is used in electronics, construction and transportation, and its price is widely read as a signal of economic health. This year it has also become a gauge of something else: how governments and companies are racing to lock down supplies of metals they consider essential to national security and technological growth.
Taylor Melvin, chief executive of Arizona-based miner Ivanhoe Electric, told CNBC's "Squawk Box Europe" that this scramble is supporting prices. Metals long described as critical are now being treated as strategic in every sense, he said, as countries and industries focus on securing access for security, economic and infrastructure reasons.
"It's certainly a good time to be in copper mining globally, and specifically in the United States," Melvin said, according to CNBC. His company explores for and mines copper, gold, silver, nickel and cobalt.
AI demand seen as resilient to a tech pullback
Investors have recently questioned whether spending on AI and the build-out of hyperscale data centers can continue at its current pace, and technology stocks have wobbled as a result. Melvin argued that copper demand from that sector is unlikely to dry up.
He described the technology industry's need for the metal as nearly inelastic, telling CNBC it is hard to imagine a large technology company basing a decision on a hyperscale data center on the price of copper. He said the same holds for defense and national security budgets, another growing source of demand.
Melvin acknowledged the retreat in technology valuations but said both things can be true at once: market sentiment toward equities can shift while those industries continue to grow and generate additional demand for copper.
Tariff uncertainty tightens supply picture
The rally has also drawn support from the unresolved question of whether the United States will tax refined copper imports. CNBC reports that in 2025 the Commerce Department recommended a 15% tariff starting Jan. 1, 2027, but no final decision has been announced publicly.
Iain Pyle, senior investment director at Aberdeen Investments and co-manager of the abrdn Future Minerals Fund, told CNBC that the tariff threat has pulled a large share of the world's copper into the United States, leaving it unclear whether those stocks will reach the rest of the market. He added that Chinese inventories appear unusually low and premiums there are climbing.
In an Oct. 15 note cited by CNBC, Pyle called copper the clearest example of a market where supply cannot keep pace with demand, and said sustained higher prices will be needed to create enough incentive for new supply. He said a pullback around tariff announcements remains possible, but described the underlying fundamentals as clearly bullish and said the chance of a price spike has grown.
The picture extends beyond the futures market. Bloomberg reported that Ivanhoe Electric is in advanced talks to sell U.S. copper, with Mining.com and Mining.com.au reporting that copper-hungry American buyers are circling the company's Santa Cruz project in Arizona. MarketBeat noted that Ivanhoe Electric shares rose 5.1% in a recent session.
The next signal to watch is Washington's decision on the proposed refined copper tariff, alongside whether Chinese inventories stay low and premiums keep rising.
