Copper hits two-month high; BHP warns AI boom will exacerbate copper shortfall

Copper futures climbed to the highest since mid-July on Thursday, leading gains in industrial metals following the Federal Reserve’s 50 basis-point rate cut that signals the central bank’s focus has shifted to supporting the labor market.

On the London Metals Exchange, benchmark copper (HG1:COM) recently traded +0.8% to $9,477/ton, while zinc and aluminum also posted strong gains.

ETFs: (COPX), (CPER), (OTC:JJC)

The Fed’s 50-bp rate cut is “beneficial to expectations for a soft landing in the U.S.,” Everbright Futures said, adding that fundamentals for copper are improving gradually.

“The increase in the medium-term outlook for rates should come as a positive, with metals highly sensitive to factory activity and overall economic growth,” ANZ Group wrote.

Potentially relevant stocks include Freeport McMoRan (FCX), Southern Copper (SCCO), Teck Resources (TECK), Hudbay Minerals (HBM), Ero Copper (ERO), BHP (NYSE:BHP), Rio Tinto (RIO), Vale (VALE).

The growth of artificial intelligence will exacerbate a looming shortage of copper, BHP (BHP) CFO Vandita Pant warned in an interview this week with the Financial Times.

The rise of data centers and AI could boost global copper demand by 3.4M metric tons/year by 2050, the CFO said, when demand should hit 52.5M tons/year, up 72% from 2021.

“Today, data centers are less than 1% of copper demand, but that is expected to be 6%-7% by 2050,” Pant told FT.