Qatar National Bank (QNB) confirmed that copper is currently entering a clearly defined phase of structural transformation in global commodity markets.
In its weekly commentary, QNB noted that despite cyclical volatility and macroeconomic pressures, the metal remains attractively valued in real terms. Copper continues to benefit from long-term momentum driven by the global energy transition and the rapid expansion of AI-powered digital infrastructure.
The commentary highlighted that supply growth remains constrained due to weak capital expenditure and regulatory complexities, reinforcing the likelihood that copper will remain at the forefront of commodities linked to long-term structural transformations.
It identified three main factors underpinning the strength of copper prices over the medium and long term. The first is limited supply growth. Recent months have revealed fragility on the supply side, with production disruptions at several major mines and successive downward revisions to output guidance by global mining companies. At the same time, capital investment in the copper sector remains below required levels, whether relative to projected demand or the aging profile of existing mines.
These constraints were attributed to difficulties in obtaining permits, lengthy regulatory processes, rising political risks in some producing countries, and shareholder pressure on companies to maintain strict capital discipline.
The commentary expected that supply would take years to catch up with rising demand, increasing the likelihood that copper prices will need to remain elevated to balance the market.
Regarding the second factor, the bank pointed out that artificial intelligence represents a powerful new source of demand for copper. Advanced data centres, high-performance computing, and semiconductor manufacturing are extremely electricity intensive, necessitating large investments in power grids, substations, and transmission systems, all of which rely heavily on copper.
The commentary added that data centres themselves are highly copper intensive, whether in wiring, cooling systems, or backup power infrastructure. As global adoption of AI applications accelerates, this sector could become one of the fastest-growing sources of copper demand in the coming years, potentially rivalling electric vehicles (EVs).
The third factor relates to the global energy transition, which represents a long-term pillar of copper consumption. Electrification is central to decarbonisation strategies, and copper forms the backbone of this transition.
The commentary explained that renewable energy sources require significantly more copper than fossil fuel-based technologies. In addition, upgrading and expanding power grids, as well as building energy storage and charging systems, all depend on substantial copper inputs.
It also noted that rapid growth in electric vehicle demand is boosting copper consumption, as EVs require several times more copper than conventional vehicles, in addition to the associated charging infrastructure.
Despite the notable rise in prices recently, the commentary observed that copper remains far from being overvalued from a historical, inflation-adjusted perspective. When adjusted for inflation, copper has underperformed several other metals, indicating scope for further price appreciation without undermining demand.
The commentary concluded that, taken together, these factors support a solid and resilient medium- to long-term outlook for copper prices.
