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Trafigura: AI Boom Could Spark a Copper Shortage

  • AI and data centers' rapid growth is creating a significant demand for copper.
  • The copper market is already facing a 4-5 million ton deficit by 2030.
  • China, a major copper producer, is considering production cuts due to raw material supply issues.
Copper

The chief economist at commodity trading giant Trafigura has warned the copper market could tighten further as a result of artificial intelligence.

Speaking at the Financial Times Commodities Summit in Switzerland, Trafigura’s chief economist Saad Rahim said that growth has “suddenly exploded” as a result of the proliferation of global data centres.

By 2030, this could amount to an additional 1m tons of need, Rahim said and that the figure is “on top of a 4-5m ton deficit gap by 2030 anyway”.

He added: “That’s not something that anyone has actually factored into a lot of these supply and demand balances.”

Rahim’s concerns surrounding AI and its dredging of resources has been echoed by others.

Recent research from the University of Washington shows that the hundreds of millions of queries logged on Open AI’s platform require the equivalent energy of 33,000 US households — around one gigawatt-hour a day.

Copper, meanwhile, rallied to its highest price point in over a year last week, hitting nearly $9,400 (£7,444), despite lingering concerns about the state of the global economy.

The energy transition has been fuelling the drive for copper as a key component of electric vehicles and renewable energy technologies.

Additionally, the prospect of lower interest rates spurring on global manufacturing, for which copper is a key material, as well as a long-awaited wake-up in China’s property industry, have also been signalling a growing need for the red metal.

But China, which is also the third-largest producer of copper from mines, has been threatening to cut production as it struggles to maintain regular raw material supplies. This problem is also felt across projects in other countries.

Kieron Hodgson, an analyst with Panmure Gordon, said in a note circulated this week that Chinese cuts would “change the narrative for all” and “significantly tighten” the global copper market, driving prices upward.

In recent months, other major copper producers, such as London-listed Antofagasta, have echoed concerns about its short-term copper production.

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By City AM

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