Global markets are influenced by the US Dollar’s debasement and the transition towards a war-time economy. The rise of AI plays a role in this shift, increasing focus on rare earths and the West’s dependency on Chinese supply chains for critical minerals.
There is a structural undersupply in copper mining which may lead to smelter curtailments, intensifying competition for this metal. The US is absorbing much of the available copper, reducing global inventory and keeping the LME tight.
Copper Demand and Data Centre Growth
The boom in data centre capacity is expected to increase copper demand significantly, requiring an estimated additional 500kt by 2027. China’s five-year plan could result in even greater expansion in data centre capacity, suggesting higher future copper demand.
The FXStreet Insights Team compiles market insights from experts, incorporating commercial, internal, and external analyst notes. Their content covers market dynamics and economic movements affecting global trading conditions.
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US Dollar and Economic Strategies
The weakening of the US Dollar is a central theme we are navigating. After the aggressive rate hikes of 2022-2023, the Federal Reserve’s pivot towards a more accommodative stance throughout 2025 has put sustained pressure on the dollar. With the U.S. national debt now sitting above $37 trillion, we see derivative traders continuing to favor strategies that benefit from this debasement, such as buying puts on the dollar index (DXY) or calls on assets priced in it.
The growth in artificial intelligence has intensified the global competition for resources, shifting the economic landscape. We are seeing the direct consequences of China’s export controls on gallium and germanium, which they initiated back in 2023, creating supply chain volatility for semiconductor and defense companies. This geopolitical tension suggests that option strategies betting on increased volatility in tech ETFs and non-Chinese rare earth producers will likely be profitable.
Copper’s structural deficit is becoming more acute, driven heavily by the AI-powered data center boom. The International Energy Agency’s forecast from early 2024, which projected data center electricity demand to double by 2026, is visibly materializing and directly translating into a squeeze on copper. For traders, this reinforces a bullish outlook, making long-dated call options on copper futures an attractive position to hold through early 2026.
This fierce competition for physical copper is keeping the market exceptionally tight, a trend reflected in the critically low LME inventory levels, which have not meaningfully recovered for over two years. The United States continues to be a primary consumer, absorbing available metal and preventing global stockpiles from rebuilding. This dynamic supports strategies like bull call spreads on copper to capture upside while managing premium costs.
