2026 Copper Market: Why Supply Shortages Could Drive Prices to Record Highs

The copper market is bracing for a supply-demand imbalance in 2026 that could reshape pricing dynamics for years to come. According to the International Copper Study Group (ICSG), refined copper demand is projected to grow 2.1 percent to 28.73 million metric tons (MT), while production will only reach 28.58 million MT—creating a 150,000 MT deficit. This structural undersupply, combined with geopolitical uncertainties spanning from China’s recovery trajectory to US trade policies, is setting up what market analysts describe as a “perfect storm” for copper bulls.

Production Headwinds: When Major Mines Go Offline

The supply crisis didn’t start in 2026—it’s already underway. Two operational catastrophes in 2025 will cast long shadows across next year’s output:

Freeport-McMoRan’s Grasberg Setback: Indonesia’s Grasberg mine, operated by Freeport-McMoRan (NYSE:FCX), experienced a major incident when 800,000 MT of wet material flooded into the primary block cave. The accident claimed seven lives and halted production. While the company aims to restart some zones by year-end 2025, the phased restart of the main operation won’t commence until mid-2026, with full production not resuming until 2027. This single mine produces roughly 10 percent of global copper supply.

Ivanhoe Mines’ Output Cut: The Democratic Republic of Congo’s Kamoa-Kakula mine (operated by Ivanhoe Mines, TSX:IVN) faced a seismic event in May that caused flooding. Though some underground work has resumed, the company is now processing stockpiled materials that will be depleted in Q1 2026. Ivanhoe’s revised guidance reflects the challenge: just 380,000 to 420,000 MT in 2026, down from the 500,000 to 540,000 MT expected range in 2027.

Jacob White, ETF product manager at Sprott Asset Management, told Investing News Network (INN) that these outages are the linchpin: “Grasberg remains a significant disruption that will persist through 2026, and the situation is similar to constraints at Ivanhoe Mines’ Kamoa-Kakula. We believe these outages will keep the market in deficit in 2026.”

There is a silver lining: First Quantum Minerals’ (TSX:FM) Cobre Panama mine could restart in late 2025 or early 2026 after Panama’s government ordered a lease review. However, ramping production at idled operations takes months, creating a lag before relief reaches the market.

Demand Accelerating From Multiple Angles

Copper isn’t facing a one-off shortage—demand fundamentals are robust and broadening. The energy transition, artificial intelligence infrastructure, and data center expansion are driving consumption upward. The Global South’s rapid urbanization adds another layer of demand growth.

China presents a complex picture. While the real estate sector—historically copper’s largest end-use market—remains weak (Reuters projects home prices will fall 3.7 percent in 2025 and continue declining into 2026), the broader economy is compensating. China’s economy proved resilient in 2025 with 4.9 percent growth expected and 4.8 percent forecast for 2026, fueled by high-tech exports.

More critically, China’s 15th five-year plan (2026–2031) prioritizes electricity grid expansion, manufacturing upgrades, renewables, and AI-related data centers—all copper-intensive sectors. White emphasizes this structural shift: “Policy focus and capital are expected to prioritize expanding the electricity grid and upgrading manufacturing, renewables and AI-related data centers. These copper-intensive areas are set to more than compensate for a subdued property market, yielding net growth in China’s copper demand next year.”

In the US, tariff-driven import surges in 2025 artificially boosted near-term demand as traders rushed refined copper into the country before potential trade barriers took effect. Refined copper inflows jumped significantly, pushing US inventory to 750,000 MT. However, uncertainty remains around future tariff regimes, which could sustain elevated premiums and regional price spreads.

The Math Points to Higher Prices

Mine production is expected to increase just 2.3 percent in 2026 to 23.86 million MT, while refined production rises only 0.9 percent to 28.58 million MT. Demand growth of 2.1 percent outpaces both metrics, crystallizing the deficit.

Natalie Scott-Gray, senior metals demand analyst at StoneX, forecasts the average copper price could reach US$10,635 per MT in 2026—a jump from current levels. Higher prices, however, trigger behavioral shifts: buyers may adopt “just-in-time” purchasing strategies from alternative sources like bonded warehouses or direct smelter sales, and manufacturers may explore aluminum can scrap price dynamics and substitution where practical. Scott-Gray noted that while aluminum can scrap price comparisons make switching feasible in some applications, limitations exist—not all end-uses tolerate aluminum replacement.

The supply-side challenges are structural, not cyclical. Lobo Tiggre, CEO of IndependentSpeculator.com, told INN that copper is his highest-conviction trade for 2026: “These things are taking years to fix. Some will take a year to get back on track, others two years. We’re looking at 2027; by then, copper demand will have kicked up even more. My base case is for copper deficits to broaden in the coming years.”

Long-Term Deficit Acceleration

A UN Conference on Trade and Development report from May projects that copper demand will surge 40 percent by 2040, requiring US$250 billion in investment capital and the construction of 80 new mines. Yet supply expansion is glacially slow: projects like Arizona Sonoran Copper Company’s (TSX:ASCU) Cactus brownfield mine and the Rio Tinto (ASX:RIO) / BHP joint venture Resolution project remain years away from production.

Wood Mackenzie forecasts copper demand will climb 24 percent to 43 million MT annually by 2035. To balance the market, 8 million MT of new supply plus 3.5 million MT from scrap recycling are needed—a production ramp that hasn’t materialized. The shortage of new projects, declining ore grades at legacy mines, and geopolitical risks concentrated in five countries (Chile, Australia, Peru, the DRC, and Russia) compound the challenge.

The Bottom Line for 2026

With low inventories, mine deficits, and persistent physical premiums, copper is positioned for record price territory in 2026. While tariff uncertainty lingers and some buyers may experiment with aluminum substitution or adjust sourcing strategies, the structural supply-demand imbalance leaves little room for price weakness. The consensus among analysts is clear: copper deficits are here to stay, and they’re only widening.