AI Demand Explosion, Supply Shortage... Why Did Copper Prices Decline?

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Despite forecasts of AI demand and supply shortages, copper prices have turned downwards.

According to BeInCrypto on September 15 (local time), Steve Hanke, a professor of applied economics at Johns Hopkins University, recently reiterated his bullish stance on copper. Hanke stated, “Global mine copper supply could see its first annual decline since 2017 this year,” and advised, “Maintain your long positions in copper.” According to the International Copper Study Group (ICSG), global mine production decreased by 1.1% in the first half of 2026.

Supply disruptions are occurring simultaneously in major production areas. Freeport-McMoRan (FCX)'s Grasberg mine in Indonesia is operating at half its capacity after a fatal landslide, with normal production not expected until early 2028. The company lowered its 2026 copper production forecast from 1 billion pounds to 700 million pounds. Chile also lowered its national production forecast by 2.6% for two consecutive quarters. The average ore grade of major mines has also fallen from approximately 1.6% in 1990 to below 0.6% in many mines today.

AI data centers have emerged as a new demand pressure. Constructing 1MW of data center capacity requires 60-75 tons of metal, a significant portion of which is copper. The market estimates that AI facilities alone will generate an additional copper demand of approximately 475,000 tons this year. Morgan Stanley projected a supply deficit of 600,000 tons, JP Morgan 330,000 tons, and the International Copper Study Group 150,000 tons. Goldman Sachs, however, pointed to the possibility of price increases being excessive and warned that manufacturers could substitute aluminum if copper prices remain high.

Contrary to strong supply and demand forecasts, technical trends are sending bearish signals. Copper formed a peak at $6.92 per pound on August 6, then showed a pattern of three peaks, one more than a double top. It subsequently fell below $6.53, and $6.29 was presented as a key support level. The Relative Strength Index (RSI) is around 42, not yet entering the oversold territory. If selling pressure continues, the next support level is indicated at $5.90.

Policy variables also pressured short-term prices. The US government's delay in deciding tariffs on refined copper imports led to copper re-entering London Metal Exchange (LME) warehouses. Neil Welsh, Head of Metals at Britannia Global Markets, commented, “Copper is leading the decline and is testing recent lows again.” While reduced supply and increased AI demand support the medium-to-long-term bullish argument, short-term charts warn of further adjustments.

[Article Key Summary]

-Global copper mine production decreased by 1.1% in the first half of 2026, with ongoing supply disruptions in major producing countries and mines.

-AI data centers are expected to create an additional copper demand of approximately 475,000 tons this year.

-Copper tested the $6.29 support level after falling below $6.53, with $5.90 indicated as the next price level if further declines occur.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*