The rising price of copper is impacting data centre development in the Asia-Pacific region, with analysts warning that tightening supplies could delay new capacity. According to a report by BMI, the region’s inefficient power grids require more copper for infrastructure, making it more susceptible to price volatility compared to global peers. China, which produces about 60% of the world’s refined copper, plays a significant role in this dynamic.
Supply Chain Challenges
Analysts suggest that while higher copper prices are not expected to halt the expansion of AI-driven data centres, they could lead to longer procurement times. Alexandra Symeonidi, a senior analyst at a global financial services firm, noted that copper constitutes only 0.5% of the overall cost of a data centre project. As a result, developers may be indifferent to price fluctuations, but supply constraints could still pose challenges. The Asia-Pacific data centre market is projected to grow at an annual rate of 11% between 2025 and 2028, underscoring the urgency of addressing supply issues.
Regional Inefficiencies
The inefficiency of Asia’s power grids exacerbates the region's exposure to copper price volatility. Current estimates indicate that transmission and distribution losses in Asia will reach 981 terawatt hours (TWh) in 2026, compared to 447 TWh in Europe and 504 TWh in the Americas. This higher copper intensity, driven by power grid losses, means that the region's data centres require more copper, further complicating supply dynamics. Alexander Kheder, a technology analyst at BMI, emphasized that this structural issue is likely to persist.
Related coverage: Arm and AMD Stocks Rise Amid AI Chip Supply Optimism, NVIDIA and Micron Stocks Rise Amid AI Demand and Supply.
The constraints on copper supply could lead to delays in the construction of new data centres, particularly in the technology sector. This situation may affect companies reliant on data infrastructure, potentially impacting stock prices in the tech sector. Investors will watch for developments in copper supply and pricing, as well as upcoming data centre project announcements in the region.