Chile's Copper Output Hits 15-Year Low… Soaring Prices on AI-Driven Demand

Copper Prices Hover Above $14,000

"Could Reach $22,000 in Q2 Next Year"

Reuters Yonhap News

Copper production in Chile, the world's largest copper producer, has dropped to its lowest level in 15 years due to severe weather conditions. Amid soaring demand driven by the current artificial intelligence (AI) development boom, copper prices—which have risen by over 47% since the start of this year—are projected to continue surging through next year.

According to the National Institute of Statistics (INE) of Chile, the country produced 369,500 tons of copper in August, a 12.8% decrease compared to the same month last year. This figure marks the lowest monthly output since February 2011. Chile accounts for 25% of global copper production, making global supply disruptions inevitable.

Bloomberg News reported that storms affecting the Andes region of Chile since mid-July, along with subsequent floods and heavy snowfall, have been identified as the primary causes for the production decline. Throughout July and August, all major copper mines in Chile temporarily suspended production, and some port facilities were damaged, causing transportation disruptions. Chilean authorities expect that even if copper output recovers, the country’s total annual production this year will decline by over 7% compared to last year.

The outlook for copper prices, which have already been climbing steadily since the beginning of the year thanks to strong AI-driven demand, has grown even more bullish. On this day at the London Metal Exchange (LME), the price of three-month copper contracts reached 14,438.50 dollars per ton—a more than 47% increase compared to the start of the year. After breaking above 13,000 dollars per ton in March—an all-time high—prices continued to set new records and surpassed 14,800 dollars per ton in early September. Since then, copper has remained around the 14,000 dollar mark.

With massive quantities of copper required for the construction of AI data centers and for wire manufacturing to upgrade global power grids, worldwide copper demand is expected to keep rising. According to market analysis firm S&P Global, annual global copper demand is projected to increase from 28 million tons last year to 42 million tons by 2040. As demand is set to outpace supply, a shortfall of around 10 million tons of copper is anticipated by 2040.

Some forecasts indicate copper prices could rise by more than 50% from current levels next year. Daniel Ghali, Chief Commodities Analyst at Deutsche Bank, noted in a recent report, "Copper prices could soar to 22,050 dollars per ton by the second quarter of next year, driven by worsening global copper shortages."

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