Copper, which soared to a record high of nearly $13,000 a tonne last week on the London Metal Exchange (LME), will likely rule higher in 2026 due to slack supplies and higher demand.
With the red metal being now used more for artificial intelligence, electric vehicles, data centres and the green economy, it is being referred to as “the next gold”.
The metal, which is used in the electrical, construction, and electronics too, is headed for its best rally in 15 years. It has increased over 40 per cent so far this year.
Heading to US
One of the issues with copper is that a major part of the supplies are heading to the US to overcome any potential tariffs that the Donald Trump administration may impose later next year. A weak dollar has also lifted the red metal’s prices.
Copper prices hit record levels in the December 2025 quarter due to a combination of strong demand and recent supply disruptions. The price reflected tighter supply and improved market sentiment, said Australia’s Office of the Chief Economist (AOCE).
US multi-national financial services firm JP Morgan’s research arm, JP Morgan Global Research, said the copper market has tightened significantly on the back of acute supply disruptions, sending prices soaring.
“In September, a fatal mudslide occurred at Grasberg in Indonesia — the world’s second largest copper mine — triggering a force majeure; the Grassberg Block Cave portion of the mine, which accounts for 70 per cent of previously forecasted production, is expected to remain closed until the second quarter of 2026,” it said.
COMEX-LME arbitrage
In addition, production in Chile and Peru have been affected due to labour problems and protest, compounding the supply shortage.
Research agency BMI, a unit of Fitch Solutions, said copper prices continue to benefit from supply disruptions and positive sentiment towards global demand.
The AOCE said the Commodity Exchange Inc (COMEX)-London Metal Exchange (LME) price differential has continued to vary as the markets try to work out the likelihood of further changes in US tariffs on copper imports.
On Tuesday, copper prices on LME ruled at $12,594 a tonne, while on COMEX, it was quoted at $5.74 a pound (approximately $12,500 a tonne).
After front-loading imports earlier this year, the US sits on ample copper reserves. However, given that refined copper could eventually be subjected to tariffs under Section 232, US copper prices continue to trade at a premium to the LME, said JP Morgan.
Annual growth forecast cut
The arbitrage opportunity not only locks excess inventory in the US for now, but also works to attract marginal additional imports to the US, said Gregory Shearer, head of Base and Precious Metals Strategy at JP Morgan.
“After essentially flat mine supply growth expected this year, our 2026 mine supply growth estimates have fallen to only around +1.4 per cent, or about 500,000 tonnes lower than our estimates at the beginning of the year,” said Shearer.
The AOCE said annual mine output growth for 2025 has been lowered to 1.4 per cent from 1.7 per cent, due to major disruptions. In the September quarter 2025.
Operations at PT Freeport Indonesia’s Grasberg mine (846,000 tonnes in 2024) were halted because of a mudslide in September. Partial operations resumed in early November. A return to full operation is expected by late 2026, it said.
May ease in 2027
BMI said with the US dollar index range-bound it cuts the probability of copper rising or falling due to the greenback. “However, copper has benefited strongly from the resilience in the US economy, which continues to outperform market expectations despite concerns about jobs,” said the research agency.
The Australian Office of the Chief Economist said high prices for copper are likely to persist through 2026. They should ease in 2027 as operations recover from disruptions, and new mines begin production.
JP Morgan said higher demand from China could eventually come into play, too, next year. During previous copper rallies, domestic demand for copper fell, and Chinese smelters were incentivised to export their products instead.
“However, the fundamental setup looks different this time round,” said Shearer.
330,000 t deficit seen
Supply disruption will continue over the next few quarters and it could curb China’s ability to wait and ride out higher prices. “We are already tracking a rollover in Chinese refined copper production and there still remains significant potential that Chinese smelters find themselves short of units of copper raw material,” said Shearer.
Beijing will soon have to raise its purchase of copper at higher prices, he said.
JP Morgan Global Research projects a global refined copper deficit of 330,000 tonnes in 2026, creating an even tighter market.
The US multinational bank’s research arm expects copper prices reaching $12,500/tonne in the second quarter of 2026, ultimately averaging $12,075 for the full year.
Data center demand growth remains an upside risk to these forecasts, it said, adding the offtake could increase to 475,000 tonnes.
Published on December 30, 2025