Copper Hits All-Time High as Dollar Falls... Rising Expectations in Korean Industry

US Dollar Index Falls to Lowest Level in Four Years

The price of copper has soared to an all-time high. This surge is attributed to a sharp increase in demand for tangible assets, following the US dollar falling to its lowest value in four years. Expectations for global growth in data centers, robotics, and power infrastructure are fueling forecasts of increased demand for non-ferrous metals.

Copper foil product manufactured by SK Nexilis. Photo is unrelated to the article content. The Asia Business Daily DB

According to Bloomberg News on January 29, three-month copper futures on the London Metal Exchange (LME) rose by 6.7% to $13,967 per ton (approximately 19,922,528 won), bringing the year-to-date increase to 12%. Prices of five other major metals also rose simultaneously: aluminum approached its highest level in four years, and zinc climbed by about 3%.

Bloomberg News analyzed that the commodity market is experiencing a sharp rally, influenced by the decline in the value of the US dollar, increased demand for tangible assets, and heightened geopolitical tensions stemming from US President Donald Trump's foreign policy. In addition to copper, which is an essential material for the energy transition, precious metals also hit record highs. Even crude oil, which faced concerns of a global supply glut last year, has seen prices rise in recent weeks.

Chikai, Chief Investment Officer (CIO) at Shanghai Cosine Capital Management Partnership, stated, "Expectations for copper price increases remain unchanged under the US's ongoing interest rate cut cycle," adding, "As long as the United States continues to invest in artificial intelligence (AI), chips, and power infrastructure, there is no clear estimate of how high prices could go."

The overall rise in metal prices occurred immediately after the US Dollar Index fell to its lowest point in four years. President Trump signaled indifference to the weaker dollar, stating, "I think it's great. The dollar is doing very well." However, Bloomberg News analyzed that the decline in the dollar's value could be a factor driving up commodity prices.

Expanding global demand for AI data centers is also cited as a factor stimulating the market. On January 28 (local time), Tesla announced in its fourth-quarter earnings report that it had begun investing in robotics and AI. Meta and Microsoft also emphasized securing power infrastructure for data centers. Since high-voltage power lines are essential for the stable operation of AI data centers, the expansion of data centers is accompanied by increased investment in power transmission and distribution networks.

In the domestic cable and raw materials industries, expectations for improved performance are rising. According to the industry, copper accounts for more than 60% of the manufacturing cost of cables and up to 90% depending on the product category. Many cable supply contracts include clauses that link product prices to fluctuations in raw material costs, so rising copper prices lead to higher sales prices and increased revenue scale.

Additionally, the domestic refining industry is also anticipating higher sales prices and inventory asset gains as copper prices rise.

However, since Korea effectively imports all of its copper, there are concerns that this could lead to a worsening trade balance and increased pressure on the Korean won. The rise in copper prices could also affect the prices of semiconductor substrates, solar panels, and battery products, raising concerns about higher manufacturing costs and product prices.