Copper prices fell to their lowest levels since late July as the Democratic sweep in the U.S. midterms raised questions about whether tighter regulatory oversight could slow the expansion of AI infrastructure, weighing on demand for the metal.
Three-month copper futures on the London Metal Exchange slipped 0.2% to $13,744 a metric ton on Friday, putting them on track for a weekly loss of nearly 3%, amid a broader selloff in technology stocks driven by concerns over tighter AI regulation.
The AI infrastructure build-out is a key source of copper demand, making the metal particularly exposed to shifts in sentiment around the technology boom. Data centers require substantial amounts of the metal for electrical wiring, cables and power infrastructure, while the expansion of electricity grids needed to support them adds to consumption.
Regulatory hurdles in the U.S. could now intensify, potentially delaying projects in states where a significant share of planned hyperscale data-center capacity is concentrated, according to market watchers.
"The most plausible regulatory threat to copper demand isn't that thousands of data-centre projects disappear overnight," analysts at commodity research firm ANZ said. "It is that approvals become more difficult, development costs rise and completion dates move further into the future."
Meanwhile, U.S. trade policy continues to reshape global copper flows. Washington imposed a 50% tariff on semi-finished copper products and copper-intensive derivatives last year, but it has yet to decide whether to extend tariffs to refined copper.
The uncertainty has encouraged traders to ship more copper into the U.S. ahead of any potential restrictions, drawing supplies away from other markets and tightening availability elsewhere. Although the premium of U.S. Comex copper over LME prices has largely narrowed, the resulting buildup in U.S. exchange inventories has yet to unwind, analysts said.
Despite the recent price decline, the longer-term outlook remains supportive, with analysts pointing to constrained mine output and declining inventories in China.
"Copper is experiencing a significant disconnect between tightening physical supply and weakening financial market confidence," said Naeem Aslam, chief investment officer at research firm Zaye Capital Markets.
Copper mine supply remains increasingly vulnerable, with operational challenges and disruptions in major producing countries--including Chile, Indonesia and the Democratic Republic of the Congo--adding to supply pressures.
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