After Hitting All-Time Highs, Experts Say There’s More Room to Rise... The Raw Material Gaining Spotlight in the AI Era

Copper Surpasses $14,000 This Month, Marking an All-Time High
Peaks at $14,850 Before Two Consecutive Days of Decline
Short-Term Pause Driven by Easing Supply Constraints
Structural Supply Shortages Sustain Medium- and Long-Term Uptrend

After reaching an all-time high, copper prices have entered a short-term consolidation phase. The surge appears to have paused temporarily due to the influx of a large volume of copper; however, as a structural supply shortage persists, the upward trend is not expected to subside easily. Experts predict that copper could break above the 16,000-dollar-per-ton mark within this year.

According to the Korea Resources Information Service (KOMIS) on August 21, spot copper prices on the London Metal Exchange (LME) hit a new record of 14,850 dollars per ton on August 17. However, after hitting this peak, profit-taking and news of easing supply-demand conditions led to two consecutive days of decline, bringing prices down to around 14,180 dollars per ton.

The delivery of physical copper by major commodity brokers pulled prices down after reaching their peak. According to Samsung Futures, global commodity trading firms, including Trafigura, delivered substantial amounts of copper to the LME, alleviating the supply crunch (squeeze) caused by the shortage of physical copper. Ok Ji Hoi, a researcher at Samsung Futures, explained, "As a result, immediately withdrawable inventory increased by 20,000 tons from 103,075 tons on the 17th to 123,100 tons, the largest increase since April." He added, "The spot-to-three-month spread also tightened to 248 dollars per ton, a significant reduction from the maximum 545-dollar backwardation (spot price overvaluation, future price undervaluation) seen on the 17th." A significant portion of this delivered volume was supplied by Trafigura, and since other companies are also preparing to bring in copper, additional volumes are expected to be registered as warrants in the coming days. Ok noted, "When spot premiums are high, it is favorable to sell near-term contracts and buy longer-term contracts at cheaper prices, and this incentive has been easing the short-term supply crunch."

Although the immediate supply crunch has eased, the structural supply shortage persists, suggesting that copper’s bullish momentum will not subside easily. Choi Jin Young, a researcher at Daishin Securities, commented, "The world’s top 20 mines have lowered their production guidance again this year, following last year." He analyzed, "The main reasons are mine aging and grade deterioration (the decrease in metal content in mined ore). The neglect of mine development investment following the supply glut between 2013 and 2015 has now led to today's supply shortages."

Meanwhile, copper demand is rapidly increasing due to soaring electricity demand driven by artificial intelligence (AI). Choi stated, "With the advent of industrial-scale AI, power demand has surged, leading to rapid construction of power infrastructure." He continued, "Investments in ultra-high-voltage transmission facilities, which use five to seven times more copper than standard power grids to minimize transmission losses, are expanding."

There are also forecasts that copper prices will surpass the 15,000-dollar threshold and reach up to 16,000 dollars per ton. Hwang Byung Jin, a researcher at NH Investment & Securities, stated, "Structurally tight mine supply conditions, combined with robust demand from AI, data centers, and power infrastructure investment momentum, are supporting persistent strength in the medium- to long-term copper market." He added, "We maintain our target of 15,000 dollars per ton for the second half LME copper price and our 'Overweight' investment recommendation."

Choi explained, "If additional liquidity is factored in, copper could easily break through the 16,000-dollar-per-ton mark within this year." He added, "Theoretically, when liquidity appears, commodity prices tend to rise in stages—from precious metals, to nonferrous metals, to energy, then to agricultural products. Judging by gold, which leads in reflecting liquidity, the nonferrous metal sector could see further gains in the first half of next year, with copper potentially continuing its rally through the first quarter."

With copper prices expected to continue climbing, related beneficiary stocks are also drawing attention. Poongsan, which operates a copper alloy business, is considered a prime beneficiary, as it can simultaneously reap gains from higher product sales prices and inventory valuation (metal gain) when copper prices rise. Korea Zinc is expected to benefit as well, as it produces copper as a byproduct during the nonferrous metal refining process. LS is anticipated to enjoy dual benefits from both power grid expansion and rising raw material prices, thanks to its copper power cable business via subsidiaries such as LS Cable. Lee Jonghyeong, a researcher at Kiwoom Securities, noted, "The rise in copper prices to the 14,000-dollar level—the highest on record—bodes well for profitability improvements in the second half for LS subsidiaries LS Cable and LS I&D as higher product prices are expected."

If the volatility of individual stocks is a concern, exchange-traded funds (ETFs) can be an alternative. The KODEX Copper Futures(H) ETF tracks copper futures on the US Commodity Exchange (COMEX) and employs currency hedging (H), allowing investors to reduce currency risk while benefiting from rising commodity prices. The TIGER Copper Physical ETF tracks spot copper prices at LME-designated warehouses, enabling investment in the physical asset's value appreciation without incurring roll-over costs from futures expiry.

This content was produced with the assistance of AI translation services.