Mint Explainer | Why copper will heat up air conditioner prices this summer

Domestic copper futures on the Multi-Commodity Exchange (MCX) were trading at ₹1,281 per kg on 9 January. According to Motilal Oswal Wealth Management, global copper prices climbed to nearly $13,000 per tonne in 2025.

The surge has been driven by global supply tightness, strong investor demand, rapid adoption of electric vehicles, renewables, rising demand from power grids and the expansion of data centres. As manufacturers pass on higher input costs, consumers are likely to face costlier air conditioners and cooling appliances ahead of the peak summer season.

Sectors ranging from heating, ventilation and air conditioning (HVAC) to electric vehicles (EVs) will feel the pinch. Why are copper prices rising? Will it spoil the fun in air conditioner purchases this summer? Mint explains.

Why are global copper prices going up?

Copper prices have hit record highs after rising about 60% in the past 12 months, fuelled by multiple demand engines converging at once.

EVs require three to four times more copper than conventional petrol or diesel vehicles. Renewable energy systems need battery storage, which is copper-intensive, and the metal is also a key component in cooling products such as air conditioners.

Supply disruptions in major mining regions, coupled with geopolitical uncertainties and tariff-driven stockpiling, have tightened availability, adding to price pressures.

How will copper prices impact industries?

Copper is central to appliances, electronics, EVs and power grids. Higher input costs are squeezing manufacturer margins and forcing price hikes for end products.

Air-conditioner and EV makers face higher wiring and battery costs, while renewable energy projects are seeing increased expenses for turbines and solar installations. Data centres and AI infrastructure, which rely heavily on copper wiring, are also facing escalating costs. Construction and real estate—dependent on copper for plumbing and electrical systems—are seeing price escalation as well.

In short, industries across energy, technology and consumer goods are facing cost inflation, which could slow the adoption of green technologies.

Will heating and cooling products like ACs and geysers be impacted?

Yes. Copper is indispensable in HVAC systems because of its superior heat-transfer properties. With prices rising sharply, appliances such as air conditioners and geysers are expected to become 7–10% more expensive.

Bathware and cookware manufacturers are also seeing price increases. While companies are exploring aluminium as a substitute, copper’s durability and efficiency make it difficult to replace fully. Consumers are likely to see higher appliance prices in 2026 as companies pass on increased input costs.

Will the rise in copper prices negate the benefits of the GST cut?

Largely, yes. In September 2025, the government cut GST on air conditioners from 28% to 18%, lowering prices by about ₹1,500–2,500 per unit. However, the benefit is being offset by rising copper prices, rupee depreciation and tighter efficiency norms.

Global copper prices surged in late 2025, pushing up input costs and squeezing margins. At the same time, a weaker rupee and new Bureau of Energy Efficiency (BEE) star-rating norms effective January 2026 are driving 7–10% price increases, erasing much of the GST relief.

What is the outlook for copper prices in 2026?

Global investment banks and analysts, including JP Morgan, Goldman Sachs and Bernstein, do not expect copper prices to stay above $13,000 per tonne, but volatility is likely to persist.

Copper is expected to trade in the $11,750–12,500 per tonne range. Structural supply shortages, a softer US dollar index (down about 9% over the past year, though the dollar has strengthened against the rupee), and accelerating demand from AI and energy-transition projects are expected to support prices.

The broad consensus is that copper is unlikely to crash and may stabilise at elevated levels, backed by electrification, infrastructure spending and clean-energy investments. The long-term trajectory remains upward.

Are there affordable alternatives to copper in air conditioners?

Manufacturers are exploring aluminium coils as a cheaper alternative, though they are less durable and harder to repair. Stainless steel, brass and plastic composites are also being tested in HVAC applications.

While innovative composites promise efficiency gains and lower reliance on copper, the metal remains unmatched in thermal conductivity and longevity. Alternatives often involve performance trade-offs. Over time, the industry is likely to adopt hybrid solutions, combining copper with aluminium or composites to manage costs while maintaining efficiency.

Which other metals could impact buyers?

Beyond copper, prices of aluminium, zinc, silver and gold have also risen. Aluminium is critical for packaging, transport and construction, while zinc is widely used in galvanisation and alloys. Silver and gold—driven by safe-haven demand and central bank buying—are at record highs, influencing jewellery and electronics costs.

Battery-linked metals such as lithium and cobalt are also under pressure, adding to cost pressures across industries. Still, copper has the biggest consumer impact: it accounts for 22–24% of the material cost of an air conditioner, far more than other metals used in trace amounts.