Copper markets are currently influenced by both macroeconomic and microeconomic factors. An anticipated AI capital expenditure boom is predicted to increase copper demand by approximately 550,000 tonnes per year by 2027, boosting overall growth.

A lack of mining investment has created a dependency on these macroeconomic trends. China’s emphasis on AI development in its Five Year Plan could elevate expectations, as economists try to estimate the required capital expenditure.

From a microeconomic perspective, concerns about US tariffs continue to limit global copper inventories. As long as these tariff concerns remain, copper supply will be restricted, potentially leading to price increases. An end to the debasement trade could further positively affect copper markets.

The macro and micro drivers for copper are finally pointing in the same direction for the first time since we saw the market rally back in 2021. We are seeing evidence of this in real-time, as LME copper inventories have recently fallen below 90,000 tonnes, a level not seen since the supply squeezes of early 2024. This extreme tightness suggests that any significant increase in demand could have a powerful effect on prices.

The demand story is being supercharged by the AI infrastructure boom, which is no longer a distant forecast but an immediate reality. Recent reports from major cloud providers show a nearly 40% year-over-year increase in planned data center construction spending for 2026, which translates directly to copper demand. For traders, this suggests that buying call options with expiry dates in the first half of 2026 could be a way to position for this accelerating demand curve.

On the supply side of the ledger, a long-term pattern of underinvestment in new mining capacity is now showing its effects. We’ve seen major producers like Codelco revise their 2026 production forecasts downward, citing project delays and persistent skilled labor shortages. This structural deficit makes sharp price pullbacks less probable, which could make it more attractive to establish long positions in copper futures.

Geopolitics is also tightening the market, with China’s upcoming Five-Year Plan drafts clearly prioritizing technological self-sufficiency and the associated raw materials. Meanwhile, the residual fear of US tariffs on refined metal continues to keep global inventory pools segmented and tighter than they otherwise would be. This effectively keeps a portion of the world’s copper supply from being freely available, creating a solid floor under prices.

Even if we see an unwind of the debasement trade and a stronger dollar, the fundamental picture for copper appears robust enough to stand on its own. The powerful demand from the green energy transition and AI is the primary story here, not currency market moves. Therefore, selling out-of-the-money puts in the coming weeks looks like a viable strategy to collect premium, given how strong the fundamental support for the market appears to be.