Copper prices are surging toward the $12,000 mark, fueled by a perfect storm of supply disruptions, frantic artificial intelligence (AI) demand, and what analysts are calling a “highly irregular” market distortion triggered by U.S. trade policy fears.
With the metal currently trading near record highs, touching $11,952 per ton on the London Metal Exchange (LME) last Friday, major financial institutions are aggressively revising their forecasts upward. Citi analysts now predict copper could hit $13,000 per ton in early 2026 and skyrocket to $15,000 by the second quarter of next year.
‘Stratospheric’ New Highs
The rally is being driven by a disconnect between the world’s insatiable appetite for the “red metal” and the mining industry’s inability to deliver it. Copper is the central nervous system of the energy transition, essential for grid expansion, electric vehicles (EVs), and the massive cooling and wiring systems required by AI data centers.
Andrew Glass, CEO of Avatar Commodities, believes prices are poised for “stratospheric new highs,” noting that the current market behavior is unlike typical cycles.
“The current rally reflects a highly irregular distortion,” Glass said, pointing to the fact that price gains are accelerating even as demand in China, the world’s largest consumer, remains lukewarm.
This sentiment is echoed by ING commodities strategist Ewa Manthey, who forecasts prices reaching $12,000 by the second quarter of 2026. She warned that such price levels are set to squeeze margins across energy-intensive sectors globally.
Trade Flows and Geopolitics
The physical market is currently bifurcated by trade policy and logistical bottlenecks. In the United States, fears of potential import tariffs under the Trump administration have spurred traders to stockpile metal, driving inventory levels on the Comex exchange to record highs.
“It feels incredibly tight because all of this material is going to the US,” said Benchmark Mineral Intelligence analyst Daan de Jonge.
Conversely, outside the U.S., supply is tightening. Major mining disruptions, including accidents at Freeport-McMoRan’s Grasberg mine in Indonesia and operations in Chile, have removed significant tonnage from the market. This supply stress is compounded by macro-level uncertainty.
“The macro overview matters the most,” said Scott Crooks, principal analyst at Chile’s state copper mining giant CODELCO. “It’s the tweets, policies that come out of different countries as they try and realign… that is what’s really going to move the needle.”
Challenging China’s Dominance
The supply crunch is accelerating efforts to diversify production away from China, which currently accounts for over half of global refined copper output. China’s smelting sector is projected to hit record output in 2025, squeezing overseas competitors by aggressively procuring concentrate despite low processing fees.
In response, Western nations and companies are bringing new capacity online. In the Democratic Republic of Congo, Canadian firm Ivanhoe Mines commenced operations at its Kamoa-Kakula smelter in November. The 500,000-tonne-per-year facility is touted as the largest copper smelter in Africa.
“The ceremony today is not just a ritual; it is the passing of a torch representing transformative change,” said Ivanhoe founder Robert Friedland.
Canada is also attempting a domestic resurgence. Despite a nearly 18% drop in output from British Columbia’s aging mines by 2023, the sector is rebounding. The Mining Association of Canada expects a “big comeback” for copper, supported by the extension of Teck Resources’ Highland Valley mine and Newmont’s operations at Red Chris.
The Investment Landscape
The convergence of tight supply and the AI boom has made copper a magnet for investment. Canada’s Sprott Asset Management launched a physical copper trust in mid-2024, which has already appreciated by nearly 46%.
“Investors who want a broad basket of AI interests will also buy into financial products which include hard assets that feed into data centres,” de Jonge noted.
However, analysts warn that unless mining projects are accelerated, the looming 30% deficit could stall the deployment of renewable energy capacity worldwide. With the Copper Mining Market expected to grow from $9.24 billion in 2024 to $13.93 billion by 2035, the race to secure units of the metal is rapidly becoming a central theme of global energy security.
By Michael Kern for Oilprice.com
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