Why Copper's Moment Is Far From Over And What's Driving The Next Phase

Copper is perhaps the metal that is most hard-wired to the global economy. The red metal is considered a bellwether for economic health, often rising when the economy is growing, and construction and industrial activity are strong. But in 2025, it was the supply of copper, not demand, that was also a major driver. Prices jumped more than 40 per cent last year as investors and businesses focused on a shortage of supply.

That trend continues into 2026, and copper has been hitting new records. Mining outages, strong investor interest, the threat of US tariffs on refined copper, and lower US interest rates, are all factors driving it higher. Copper has climbed more than 20 per cent since November and traded above $13,000 a tonne on the London Metal Exchange (LME) for the first time in January.

Now, some strategists say it is vulnerable to a pull back this year, even if copper prices head higher first. Goldman Sachs analysts reportedly say speculators have been behind recent gains, and there could be a correction down to $11,000 per tonne this year.

“It's really been a perfect storm and going into this year, we had this very significant rally in precious metals, with gold, silver rallying sharply and we've seen the macro environment become a bit more supportive of copper,” said Sudakshina Unnikrishnan, head of base metals research at Standard Chartered Bank in London.

Even if prices trend lower this year, there is a bigger factor at work that could fuel copper's gains well into the future. S&P Global recently found that the“accelerating pace of electrification” is one factor expected to drive copper demand to 42 million metric tonnes by 2040. That would be a 50 per cent increase from current levels, and supply does not look like it will keep up.

But back to 2026. Strategists say there are forces that could keep the price moving higher temporarily. For instance, if the Federal Reserve cuts interest rates, that would weaken the US dollar, and the dollar and copper have had a traditional inverse relationship. Geopolitical uncertainty is also contributing to higher prices.“It really has been risk-on this year so far, and that's really impacted copper significantly and perhaps also increased speculative and investor appetite. I think the whole metals space has really benefited on the back of that,” said Unnikrishnan.

Mining outages plagued the industry in 2025 and some of those continue to hurt supply, particularly the outage at Grasberg mine in Indonesia, the world's second largest copper mine. It is not expected to return to normal production before 2027. In early 2026, a strike at Chile's Mantoverde mine also affected copper supply.“Generally, it's going to be in a deficit. The supply isn't coming back quickly. It's just not coming back fast enough,” said Bart Melek, global head of commodities research at TD Securities in Toronto.

Melek said the price gains may be overdone.“I think the market is a little overbought and might correct once there is clarification on US tariff policy,” he said, adding that some buyers were keeping higher inventories because of the uncertainty. The US assessment of whether to put new tariffs on refined copper is expected by the end of June. There are already tariffs on semi-finished copper.

Unnikrishnan said the market has been anticipating higher tariffs from the US and investors had, therefore, moved supply to the US ahead of that. That had also helped support the market.“It's fair to say there's no lack of causes of uncertainty and volatility in prices going forward. There's a whole plethora of factors which could pose significant upside or downside risks to price,” she said.

In the near term, prices could continue to move higher but then backtrack, coming off of record levels.“We do think prices are likely to remain very well-supported in the first half of this year,” Unnikrishnan said.“We're expecting prices to have an annual average of $12,213 (per tonne). We're expecting prices to be stronger in the first half of the year and ease a bit as we go into the second half, easing from these all-time highs.”

She expects first quarter prices to average $12,850 per tonne, with the average rising to $13,050 in the second quarter. But Standard Chartered also forecasts prices to average below $12,000 in each of the third and fourth quarters, with a 2027 average of $11,575.

Even if prices dip, copper is expected to remain in a long-term bullish uptrend.“If we were talking about copper 10 years ago, we would have been talking about the traditional markets,” said Daniel Yergin, vice chairman of S&P Global.“There are now new vectors of demand that didn't exist 10 years ago in any significant way.”

He said one is the energy transition, with electric cars using 2.9 times more copper than traditional vehicles. Data centres, required for artificial intelligence, also have a high demand for electricity - and copper. Increases in defence spending are another driver of demand for copper.“It takes 17 years from discovery to production for a new copper mine,” Yergin said.“That time has to be shortened.”

As it now stands, S&P Global expects production to peak in 2030 at 33 million metric tonnes, and unless there are adjustments, there could be a supply deficit of 10 million metric tonnes by 2040. The report also forecasts a more than doubling of recycled copper scrap.

Yergin spoke to KT LUXE just after a trip to Riyadh for a conference there last week.“Copper was a dominant theme at the Saudi Future Minerals Forum,” he said.

As copper prices headed higher, some buyers switched to alternatives, like aluminium. Yergin expects innovation and technology may provide some longer-term answers to the problem of significant shortages.“As copper prices go up, it certainly creates a tremendous incentive for innovation,” he said.“There's a lot of places where you can't substitute copper because of the amount of heat generated.”

Yergin also noted that new types of investors are focusing on copper and other metals.“What we're seeing is that the Sovereign Wealth Funds in the Gulf are starting to become active players in mining because they do have a longer time horizon,” he said.

Melek said he is also seeing other institutional investors becoming more interested in diversifying into copper and other metals.“There is increasing interest on the part of portfolio managers to stray away from their traditional 60/40 (stocks and bonds) to include as much as 25 per cent in commodities,” he said.“There is a constituency out there that believes you should have representation of these hard assets.”

For individuals, there are a number of ways to play the copper market. One is to buy physical copper. Another is to buy exchange traded products that invest in copper, either in the metal itself or in futures contracts. A popular way to invest is through copper mining companies. They can be purchased as individual equities or in exchange traded funds.

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