Copper, used across manufacturing, home appliances and construction, serves as a leading indicator for the real economy. Its price, long dubbed "Dr. Copper," is climbing faster than industry expected and setting record highs day after day.
Fears of a global slowdown persist due to sluggish downstream demand and high interest rates, yet the copper market is running hot. As copper becomes a core asset for AI and energy security rather than just a basic industrial material, the decades-old rule that "when copper rises the economy is good, when it falls the economy is bad" is breaking down.
◇ Standard copper smelting fees at $0… mines become the "super boss"
As of the 29th (local time), spot copper on the London Metal Exchange (LME) closed at $12,306 per ton (about 17.7 million won), marking record highs for 11 straight days since the 19th. The 19th was when Chilean copper miner Antofagasta and Chinese smelters agreed to set next year's benchmark smelting fee at $0 per ton.
Typically, smelters take copper ore from mines and remove impurities in exchange for a fee. A fee of 0 means smelters have effectively raised the white flag to the miners, saying, "We'll do it for free—just supply the ore."
After this unusual deal, copper prices jumped about 5%, blasting through the $12,000 level. Industry watchers say agreeing to a $0 benchmark smelting fee for next year is "the opening salvo of an unprecedented copper supply shock."
The shortage is largely due to physical production disruptions. According to Meritz Securities, major setbacks such as the accident at Indonesia's Grasberg mine and the permanent shutdown of Canada's Horne smelter hit in the second half, pushing the copper supply chain to the brink of collapse. The International Copper Study Group (ICSG) projected, "Next year, copper supply will shrink more than previously expected while demand will rise further, creating a structural supply shortfall of about 150,000 tons in the market."
◇ Even with higher prices, big tech demand stays solid… "speed over expense"
Supply is blocked while the nature of demand is changing fast. Unlike traditional industries such as construction, which used to slam their wallets shut when copper rose, today's copper market leaders—AI data centers and power grids—seem unfazed by price spikes. For big tech corporations, building infrastructure ahead of rivals to secure the market matters far more than the immediate expense burden.
What's more, even if copper becomes pricier, the impact on big techs' project budgets is limited. Jang Jae-hyeok at Meritz Securities said, "Even if copper prices surge 10% when building a 1 GW data center, the added cost is less than 0.3% of the total project expense." As a result, structural demand that scoops up volumes regardless of price is dominating the market.
The industry does not see the current price rally as a blip. Companies in the mining sector are estimated to need an "incentive price" above $12,000 to launch new projects. If prices fall below that, profitability suffers and the odds of new supply dwindles. Even if investment decisions are made now, it takes an average of 15.7 years from discovery to production, making it hard to ease shortages anytime soon.
◇ Poongsan books "price gains," LS Cable & System scales up "revenue size"
Amid this "super copper" trend, related companies in Korea are also smiling. Poongsan, which runs both defense and copper processing (fabricated nonferrous) businesses, benefits from price gains (inventory valuation gains) when copper rises. Copper bought cheap and stored in warehouses is sold at current higher prices reflected in product prices, lifting operating profit by the amount of the metal gain. On top of that, a price-linking mechanism that immediately passes raw material increases through to selling prices means results improve as copper climbs.
LS Cable & System, which makes the power cables that serve as data centers' arteries, sees revenue expand when copper rises. The wire industry typically includes an "escalator clause" that reflects raw material swings in product prices. As copper pushes up sales, fixed-cost burdens ease through economies of scale.
On top of that, demand is surging for high-value products such as extra-high-voltage cables for AI data centers and submarine cables, and brokerages expect next year's earnings improvement to steepen. The explosive growth of the AI industry is elevating copper's status from "Dr. Copper" to "super copper," a core material of future industries, redrawing the industrial landscape.