When young people learn about economics, one of the first things they learn is about supply and demand. It is the most basic method to understand how prices are determined. The process works best on commodity prices because for materials that are processed, there are often monopolies and oligopolies involved, which distorts the supply demand equation.

In an article by Polina Devitt and Pratima Desai of Reuters, copper prices are closing on the $12,000 a ton mark. The demand is from data centers that power artificial intelligence and tight supplies collide with shortages outside of the US.

Copper wiring is valued for its exceptional electrical conductivity and the demand from data centers, electric vehicles and infrastructure need copper.

Copper prices are up 35% so far this year, the largest gain since 2009.

A recent Reuters survey of analyst’s forecasts shows the copper market will see a deficit of 124,000 tons this year and 150,000 tons.

Investment bank Macquarie expects global copper demand at 27 million tons this year, up 2.7% from 2024. Demand from China is expected to rise 3.7%, outside of China demand is expected to 3% next year.

Supply disruptions this year including an accident at Freeport McMoRan’s giant Grasberg mine in Indonesia in September, while other miners such as Glencoe have cut production guidance for 2026, reinforcing expectations of tight supplies.

The overall amount of copper stored in exchange warehouses is up 54% so far this year at 661,021 tons.

Traders shipped copper to the US since March due to higher prices on Comex ahead of US President Trump’s planned import tariffs.

Linking to dividend paying stocks, if you own commodity stocks supply and demand is something you need to examine and ensure you pay attention to both supply and demand issues. If the company uses commodities, the issue is can the companies pass on the increased costs?

There are more questions than answers, till the next time – to raising questions.