AI data centers lift copper to record; signals warn near term

Copper reached a record near $6.63 per pound on June 2 driven by demand tied to AI data-center construction, then fell to about $6.27 per pound, a decline of roughly 6% from the peak. Options on the United States Copper Index Fund (CPER) show heavy call activity while price charts and futures positioning point to mixed market signals.

Hyperscale AI facilities use substantially more copper than conventional data centers. The Copper Development Association estimates a single hyperscale site can consume up to 50,000 tonnes of copper, compared with 5,000 to 15,000 tonnes for a typical data center. Investment bank estimates place data-center copper demand at about 475,000 tonnes this year, and more than 500 new centers are reported to be in development globally.

Industry research forecasts long-term supply tightness. One projection estimates a cumulative shortfall of about 10 million tonnes by 2040 as global copper demand rises toward the mid-2040s.

Price action formed a double-top pattern against the record zone in May and early June, a pattern defined by two failed attempts to break the same resistance level. At the same time the U.S. Dollar Index has risen while copper stalled, and U.S. Treasury yields have moved higher. A stronger dollar raises the cost of dollar-priced commodities for overseas buyers.

Options and futures positioning diverge. On CPER the put-call volume ratio dropped to about 0.11 from a 0.27 peak on June 2, indicating calls outnumbered puts. The latest Commitments of Traders report shows commercial hedgers, who are closely tied to physical copper, are heavily net short and reduced long positions by roughly 3,254 contracts. Non-commercial or speculative traders held about 111,525 long contracts against 32,692 shorts and added more than 5,800 longs as prices hit highs.

A proprietary Copper-Gold Investor Rotation Index sits near 1.23 and has risen along with copper prices; the same index fell at a prior peak in January before a correction. Traders identify several market markers to watch next: a clear break above the recent double-top zone, another failed attempt at that ceiling, further moves in the U.S. dollar and yields, and whether commercial hedgers begin to cover short positions.

On the demand side, Nvidia CEO Jensen Huang has said copper will remain the dominant material for chip interconnects “for as long as possible” before any shift to optical connections. For now, data-center copper demand and positioning data are the main factors cited by market participants.