Copper Prices May Stay Elevated as AI Data Centres Strain Supply: Survey

The global copper market may be heading towards a supply crunch as electricity consumption rises sharply, the Economic Survey 2025-26 warned on Thursday, 29 January 2026. The reason behind this shortage is primarily fuelled by the rapid expansion of AI data centres and renewable energy projects.

The survey pointed out that copper prices have been climbing amid tight supplies and steadily rising demand. What was once treated as a standard industrial metal is now being seen as a strategic chokepoint in the global push towards a low-carbon, data-driven economy.

Why Has Copper Moved to the Centre of the Energy Transition?

According to the Economic Survey, the global energy transition is no longer defined only by technology or innovation. Who controls access to critical minerals increasingly shapes the global energy transition.

Copper now sits at the heart of this shift. Along with lithium and nickel, they have moved from the background of commodity markets to the centre of strategic and geopolitical competition. The reason is simple: modern infrastructure depends heavily on copper.

Demand has accelerated due to three parallel trends:

• The rapid build-out of AI data centres, which require extensive power transmission and cooling networks

• Expansion of renewable energy capacity, particularly wind and solar projects

• Rising investment in electric mobility and electricity grid upgrades

The Survey highlighted how material-intensive this transition is. Approximately 2,866 tonnes of copper are needed for a 1 GW wind turbine. Given an average ore yield of 0.6%, generating this output involves processing more than 47,76,67 tonnes of ore, even before waste and losses are factored in. Under real-world mining conditions, the total material moved per gigawatt can comfortably cross 1-2 million tonnes, reflecting the intensity of copper extraction.

These realities, the Survey noted, have turned copper into a key determinant of energy security and industrial competitiveness.

What Is Behind Copper’s Rising Prices and Volatility?

Copper has also become one of the most price-sensitive base metals recently. The Economic Survey attributed this volatility to a mix of supply disruptions and sustained global demand.

On the supply side, the Survey cited mine outages in Indonesia, Chile and the Democratic Republic of Congo, all of which have constrained output. Simultaneously, growing concerns about a medium- to long-term supply deficit are emerging as new mining capacity struggles to come online quickly.

These pressures have intensified as demand from the power sector and global data centres continues to rise, even as mineral supply chains face disruptions from trade protectionist measures.

The impact is visible in prices. As of 29 January 2026, copper prices in the domestic market were up more than 54% year-on-year, trading close to ₹1,268 per kg.

Copper is predicted to hold up well even if prices for other commodities decline. In light of this, base metals like iron, copper, and aluminium are probably going to see modest price hikes, with copper being bolstered by ongoing demand from data-intensive infrastructure and green energy projects.

What Does This Mean for Markets and Investors Going Ahead?

Equity markets reflected the renewed focus on metals. Shares of Hindustan Copper, the country’s only government-owned copper producer, surged 20% to ₹760.05 on 29 January 2026.

The survey drew attention to India’s relatively stable macroeconomic position, noting that foreign exchange reserves remain comfortable and external debt levels are under control. This has helped the economy absorb swings in global commodity prices.

At the same time, demand linked to AI infrastructure and clean energy is continuing to grow. As a result, copper is likely to play a larger role in shaping market behaviour. For investors, the focus in the period ahead will be on how prolonged supply constraints and higher metal prices feed inflation trends, input costs and overall market sentiment.

Sources:

BusinessToday

ET