Copper markets are currently affected by a mix of big economic trends and specific industry conditions. Experts predict that increasing investments in AI technology could raise copper demand by about 550,000 tonnes annually by 2027, leading to significant growth. Investments in mining have not kept pace, making the market more reliant on these broader economic trends. China’s focus on AI in its Five-Year Plan could raise expectations, as economists try to figure out the needed investment. From a local perspective, concerns about tariffs from the US limit global copper supplies. As long as these tariff worries persist, the supply of copper will stay tight, which could drive prices up. If the current market pressures ease, this could also positively impact copper prices. For the first time since the market rally in 2021, the big economic and local factors for copper are aligning. Recent data shows that LME copper inventories have dropped below 90,000 tonnes, the lowest level since the supply shortages of early 2024. This tight supply means that any significant rise in demand could significantly affect prices. The demand side is getting a big boost from the AI infrastructure boom, which is no longer a future prediction but an immediate fact. Major cloud providers report a nearly 40% year-over-year increase in planned spending for data center construction in 2026, directly increasing copper demand. For traders, this suggests buying call options with expiration dates in early 2026 to anticipate this growing demand. On the supply side, a long-term trend of underinvesting in new mining projects is starting to show. Major companies like Codelco have cut their 2026 production forecasts due to project delays and ongoing labor shortages. This supply shortfall makes sharp price decreases less likely, making long positions in copper futures more appealing. Geopolitical factors are also tightening the market. China’s upcoming Five-Year Plan emphasizes technological self-sufficiency and the raw materials needed. Also, ongoing concerns about US tariffs on refined metals keep global inventory lower than usual, limiting the available copper supply. Even if there is a shift in currency markets and a stronger dollar, the underlying demand for copper is strong enough to remain stable. The key drivers are the push for green energy and advancements in AI, not fluctuations in currency. Therefore, selling out-of-the-money puts in the coming weeks could be a good way to earn a premium, reflecting the strong support in the market.

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