Aluminium prices have surged from $2,300-2,600 per tonne in 2024 to more than $3,800 per tonne on the London Metal Exchange (LME), with prices moderating only slightly in the past 10 days. According to reports from Business Standard, copper crossed a record high of $13,000 per tonne and even $14,000 in May, making it roughly 28% more expensive than the average price in FY24 when most equipment procurement was planned. The benchmark prices increased 30-35% between early 2025 and May-June 2026, creating significant cost pressures across India's power equipment and renewable energy sectors. Recent forecasts from Currie & Brown indicate that UK data centre construction costs could rise by up to 6.8% by September under higher oil-price scenarios, with aluminium forecast to rise by as much as 12.4%, steel by up to 9.1% and copper by 5.5%. The demand for aluminium and copper is especially high due to widespread investment in digital infrastructure and energy transition projects, particularly data centres and mechanical, electrical and plumbing (MEP) intensive construction projects.
The metal price surge is translating into substantial cost increases for critical power infrastructure components. As reported by Business Standard, a 400 Kilovolt double-circuit line of 500 km needs roughly 8,500 tonnes of aluminium in conductors alone, with costs rising from around ₹164 crore in 2024 to ₹245 crore at current price levels. Aluminium parts account for over 70% of the raw material cost in overhead power cables, transformers and busbars. The sector making electrical-power equipment constitutes about 48% of aluminium's overall demand, with the metal used extensively in conductors, overhead cables, switchboards, coil windings, and capacitors. Recent analysis shows that data centres are unusually exposed because volatile metals sit inside the packages that control power availability, M&E delivery, commissioning dates and contractor margin risk. In India specifically, steel prices could rise by up to 18%, caused by strong domestic demand and reliance on imports, while Singapore could see steel costs increase by just 4.3% partly because major projects have already secured materials through early procurement strategies.
Renewable energy projects are also significantly affected by the metal price surge. According to reports from Business Standard, wind turbines need roughly 3.5 tonnes of copper per megawatt and solar mounting needs 1.5-2 tonnes of aluminium per megawatt. The price rise is translating into thousands of crores of addition to the sector's annual metal bill, given India's addition pace of over 30 gigawatt (GW) of solar and 6 GW of wind annually. For distribution transformers, a standard 100 kVA unit has roughly 60 kg of copper in its windings, with costs rising from around ₹43,000-44,000 per unit in 2024 to ₹46,000-47,000 currently. Recent data centre exposure analysis reveals that aluminium affects façades, louvres, cable containment, busbar casings, raised floors and cooling components, while copper affects HV/LV cabling, busbars, earthing, transformers, switchgear and UPS systems. The research shows that data centre construction projects rely heavily on the materials that stand to be hardest hit by volatile oil prices, with their huge ongoing energy demands meaning running costs are expected to rise too.
The cost escalation is creating significant challenges for project economics across the power sector. As reported by Business Standard, input costs for the cable and conductor industry have risen by up to 35% in the past few months, resulting in squeezed margins for manufacturers and price increases for buyers. Transformer manufacturers are also being squeezed on cold-rolled grain-oriented (CRGO) steel, where domestic production is only 50,000 tonnes against an annual demand of 400,000 tonnes. The impact is particularly severe for tariff-based competitive bidding (TBCB) projects, with 84 projects worth about ₹2.37 trillion under execution as of December 2025, most bid at pre-2025 metal prices. The research suggests that the strongest hotel projects don't try to remove uncertainty - they focus on the outcome and remain flexible in how they get there, allowing teams to respond to changing costs, lead times and market conditions without losing sight of what the project is trying to deliver. The effect of oil price volatility will not be felt evenly across global construction markets, with operators who make procurement decisions months in advance expecting some insulation, while those who don't face much greater exposure.
Industry experts anticipate continued pressure from elevated metal prices in the near term. According to reports from Business Standard, aluminium prices are expected to remain firm in the short term on account of elevated global benchmarks and ongoing supply uncertainties. However, as additional capacity from China and Indonesia enters the market, price volatility may gradually ease. The aluminium market is expected to remain tight through this year, while a more balanced supply-demand scenario is likely to emerge next year, according to industry analysis. The research suggests that the companies that will cope best are the ones that prepare for cost fluctuations, rather than waiting for the market to stabilise. Companies are adapting through better planning, engineering optimization, and diversified sourcing strategies to maintain project viability. Recent analysis emphasizes that the key commercial decision is whether the client wants nominal cost certainty or real delivery certainty, with the US-Iran agreement having reduced pressure on energy markets, but there is still uncertainty over when and where oil prices will settle, and how supply chains will respond in the coming months. As noted by Currie & Brown, the most successful hotel projects do not attempt to eliminate uncertainty - they concentrate on the end result and stay adaptable in their approach, enabling teams to adjust to shifting costs, lead times, and market conditions while keeping project objectives in view.
