AI and war drive commodity markets: Copper hits record, aluminum peaks

Commodity markets experienced a significant surge in the first half of the year, with base metals like copper and aluminum reaching record or multi-year highs. The primary driver identified for these price increases is the massive investment in artificial intelligence by technology companies, leading to intense demand for data center construction. This, coupled with global supply chain issues, pushed copper to an all-time record of $6.67 per pound on June 2.

Geopolitical tensions, particularly the US/Israel-Iran conflict, also played a role. Disruptions in oil supply prompted a shift towards renewable energy, boosting copper demand. Tensions in the Strait of Hormuz threatened sulfur supply, directly impacting copper production in Zambia and Congo. Furthermore, production declines in Chile and issues at Freeport's Indonesian mine, which will prevent full capacity until 2027, tightened the market. Copper, after an initial 6% drop in March, recovered its losses through strong April and May purchases, ending the first half with a 9.8% gain for investors.

Aluminum prices were largely shaped by supply panic stemming from the US/Israel-Iran war. With 80% of aluminum exports from Qatar, Bahrain, and the UAE passing through the Strait of Hormuz, concerns about supply disruptions intensified after an attack on the UAE-based EGA's Et-Tawila facility. Rising global electricity prices, a major component of aluminum production costs, and China's production caps further pressured prices upward. Aluminum hit a four-year high of $3,787 per ton on June 2. However, a peace agreement between the US and Iran eased geopolitical fears, leading to a sharp 15.8% correction in June, though aluminum still closed the first half with a 3% increase.

Kyle Rodda, Senior Financial Markets Analyst at Capital.com, noted that the market's volatility could be sustained. He emphasized that the surge in copper is fundamentally linked to the AI investment boom and the resulting strain on data center construction. While currency fluctuations and US trade policies might offer support, Rodda believes the core issue lies with AI demand and the supply balance, suggesting prices could remain strong.

“

The rise in copper is driven by the boom in AI investments. Data center construction is causing serious congestion in the market. The depreciation of the dollar and US trade policies in early 2026 also supported the process. But at the end of the day, the real issue is AI and the supply balance; this suggests that prices can continue to be strongly supported.