AI Makes Basic Metals in Demand, Copper to Nickel Prices Rise

Illustration of copper. The price of the base metal rose in July, driven by demand from the AI sector and concerns about global supply. Illustration photo: Pexels.

JAKARTA - Base metal prices rose in July. Demand from the artificial intelligence or AI sector also triggered it, while the market is still concerned about the supply of copper, aluminum, nickel, and zinc.

Anadolu Agency, quoted Wednesday, August 5, reported that the price of base metals was driven by strong demand from the AI sector, a weakening US dollar, supply risks, and shrinking opportunities for the US Federal Reserve to raise interest rates in the near future.

Base metals are a group of industrial metals such as copper, aluminum, nickel, and zinc. These metals are widely used in manufacturing, technology, and energy.

Copper prices jumped 4.7 percent per pound. The increase occurred because the market was worried that the ongoing and planned mine projects were not enough to meet the surge in demand.

South Korea and Chile's cooperation in critical minerals also supports demand. Seoul and Santiago signed five agreements related to lithium and copper.

The cooperation includes a full value chain partnership, information exchange, and technology cooperation.

Critical minerals are minerals that are important for strategic industries, but their supply is vulnerable to disruption. Lithium and copper are included in this group because they are needed in many modern industrial chains.

On the supply side, the market is still concerned about mine production in Chile. Low processing costs also signal that supplies are tight.

Global copper stocks continue to fall. At the same time, demand from China remains strong. This combination makes the pressure for price increases even greater.

Copper production also faces unfavorable weather and operational disruptions. Washington is expected to impose tariffs on copper imports. The plan also adds to market anxiety.

Aluminum prices rose 2.5 percent per pound. The impetus came from tensions in the Middle East, low inventories, and an increase in Chinese aluminum exports which showed that global demand was still strong.

According to the International Energy Agency's (IEA) latest outlook report, aluminum and copper prices rose between January 2025 and April 2026 due to supply constraints. Copper prices also tested record highs.

Aluminum stocks on the London Metal Exchange and Shanghai Futures Exchange continue to fall. The two exchanges are one of the market references for reading stock and metal prices.

Middle East conflicts are reported to make the procurement of aluminum cans more difficult. This disruption also affects the company's operations such as Coca-Cola.

Anadolu Agency said that the shipment of aluminum from Indonesia was also disrupted by new control rules on rare earth elements, uranium, and tin. This condition adds pressure to the supply chain.

Rare earth elements are a group of important minerals that are widely used in high technology products.

Nickel prices rose more sharply, by 5.2 percent per pound. The increase occurred after the US reportedly planned to impose a 12.5 percent tariff on imports from 60 countries.

The tariff plan has sparked concerns that nickel trade costs will increase. Nickel is widely used for stainless steel and batteries.

Zinc prices also rose 2.5 percent per pound. Low inventories and supply risks are the main concerns of the market.

Futures and commodities market expert Zafer Ergezen told Anadolu that demand from the defense and AI industries played a key role in the rise in base metal prices in July.

"AI is the sector that contributes the most to global growth because this sector attracts the most investment and, as a result, experiences the strongest growth," said Ergezen.

He said demand for base metals has increased significantly due to the growth of the AI sector.

According to Ergezen, the selling pressure on AI stocks recently has raised questions about the sustainability of large AI investments and the profitability of companies in the sector. However, AI demand and growth are still strong. "This growth is expected to continue in the coming period, and we will see that the upward trend in certain base metals remains strong, or at least more resistant to declines," he said.