Copper crunch hits components cost amid AI demand surge

Tight upstream copper concentrate supply has kept prices high despite rising exchange inventories, squeezing margins for electronics companies and prompting suppliers to pass costs on and cut low-margin output — developments that could push component prices higher worldwide as AI-driven demand accelerates consumption and firms stockpile materials across the manufacturing and infrastructure sectors.

Prices climb, margins compress
Global copper prices rose further in April and May, with the London Metal Exchange spot average for April 2026 at about US$12,891.38 per ton and an intraday spike on May 13 to US$14,097, the highest level since early 2026. Industry analysts note that pricing for electrolytic copper foil, lead frames, and conductive copper paste is closely tied to international copper markets, keeping procurement costs elevated and compressing downstream margins for printed circuit board and passive component makers.

Suppliers raise prices, trim low-margin lines
Upstream suppliers have reacted by fully linking material costs to market movements, adding processing-fee adjustments and curbing output of low-margin products to protect gross margins as artificial intelligence demand improves product mix. A Taiwan-based lead-frame supplier said the latest round of price increases took effect in the second quarter of 2026, with double-digit hikes across product lines and customer segments, and that it will reassess pricing every quarter. The company did not rule out a third wave of increases in the second half of 2026, given persistently high international copper prices and accelerating AI-related demand.

Passive components feel the pull
The multilayer ceramic capacitor market has become more active, and supply-chain sources report rising demand for upstream conductive copper paste. Passive component customers expect copper prices to remain sticky and are stepping up inventory preparation and placing long-term orders to lock in raw materials, improving order visibility for suppliers.

Output flat, demand steady
The International Copper Study Group reported that global copper mine output in the first quarter of 2026 was about 5.59 million metric tons, roughly flat year on year, while mine capacity utilization fell to 76.8%. Global refined copper output reached about 7.29 million metric tons, up 4.5% year on year, with China and the Democratic Republic of the Congo each posting 9% growth. Apparent refined copper demand was about 6.89 million metric tons, up 0.8%, with China accounting for roughly 58% of global demand and an apparent surplus of 396,000 metric tons.

Data centers drive the next demand wave
By the end of April 2026, combined copper inventories at the LME, COMEX, and SHFE totaled 1.1488 million metric tons, the highest since January 2023 and up 55% from the end of December 2025 to 404,600 metric tons. Experts noted that the expanding use of copper in data centers — each expected to consume 20,000 to 30,000 metric tons — is turning them into a key driver of demand, with future consumption forecast to grow several times over.

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