Throughout 2025, copper’s rally was anchored to the narrative around AI infrastructure build-out and the substantial volumes of physical metal required to support it. Data centres, transmission upgrades, substations and cooling systems are all copper-intensive, and the theme has attracted significant capital.
At prices above USD 13,000, copper appears to be discounting a more rapid phase of demand acceleration than is currently observable. Grid build-out remains steady rather than showing evidence of a surge, and market structure does not yet exhibit the persistent characteristics of near-term strain. Visible inventories remain elevated and the forward curve trades in contango, suggesting the physical market is adequately supplied for now.
To assess whether pricing aligns with execution, we can consider both hyperscaler investment intent and grid-level physical delivery.
An equal-weighted basket of Microsoft, Amazon, Alphabet and Meta shows forward capital expenditure growth of roughly 12 percent year-on-year based on FY2026 to FY2027 estimates. The level of growth remains healthy. However, recent revision momentum has softened across the group, indicating moderation in acceleration.
Below chart – Price ratio Copper vs Hyperscaler basket
(LMCADS03 Comdty) / (0.25 * MSFT US Equity + 0.25 * AMZN US Equity + 0.25 * GOOGL US Equity + 0.25 * META US Equity)
Source: Bloomberg
On the execution side, an equal-weighted basket of Eaton, Schneider Electric, ABB, Quanta and Siemens shows forward revenue growth averaging approximately 8 percent. Revisions are broadly stable to modestly positive. This suggests steady expansion in physical infrastructure, but not an emergency build phase.
Below chart – Price ratio Copper vs Grid build out firms
(LMCADS03 Comdty) / (0.20 * ETN US Equity + 0.20 * SU FP Equity + 0.20 * ABBN SW Equity + 0.20 * PWR US Equity + 0.20 * SIE GY Equity)
Source: Bloomberg
Meanwhile, copper market structure does not confirm acute tightness. Exchange inventories remain elevated across LME, SHFE and CME. The forward curve has largely traded in contango rather than sustained backwardation. These are not the typical characteristics of a market experiencing immediate supply strain.
Some market participants argue that the structural copper “crunch” is a 2027 story rather than an immediate one. If so, recent price strength may reflect expectations being pulled forward. This does not undermine the strategic case for long copper exposure. The hard-asset thesis remains intact. However, price appreciation has accelerated more rapidly than the current pace of observable execution.
The challenge for traders and investors alike is therefore tactical: managing near-term volatility and valuation risk while maintaining longer-term strategic positioning.
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