What's Pushing Copper to Record Levels in 2026? Supply Crisis Meets Soaring Demand

The copper market faces a perfect storm heading into 2026. Production is stumbling while demand keeps climbing—a mismatch that’s setting the stage for significant price appreciation and reshaping how industries source materials.

The Supply Crunch: Mine Disruptions Are Piling Up

Last year exposed how fragile global copper production really is. When Freeport-McMoRan’s Grasberg operation in Indonesia experienced catastrophic flooding from 800,000 metric tons of material pouring into its primary block cave, it wasn’t just a headline—it was a game-changer. Seven workers died, operations halted, and now the company won’t resume full production until 2027. The phased restart at Grasberg’s main block cave won’t even begin until mid-2026.

That same year, Ivanhoe Mines’ Kamoa-Kakula mine in the Democratic Republic of Congo faced its own crisis when seismic activity triggered flooding. The mine is now running on stockpiled material, but here’s the thing: those reserves get depleted by Q1 2026. Ivanhoe cut its 2026 guidance to 380,000–420,000 metric tons, down from the 500,000–540,000 range planned for 2027.

Then there’s BHP’s earlier Escondida shutdown and the prolonged uncertainty around First Quantum Minerals’ Cobre Panama, which has been offline since late 2023. Even as some operations restart, ramping back to full capacity takes time—and time is something the market doesn’t have.

According to Jacob White, ETF product manager at Sprott Asset Management, these outages will keep the market in deficit throughout 2026. “Grasberg remains a significant disruption that will persist through 2026, and the situation mirrors constraints at Kamoa-Kakula. We believe these outages will keep the market in deficit.”

Demand Is Accelerating on Multiple Fronts

Meanwhile, consumption keeps climbing. The energy transition, AI infrastructure, data center expansion, and rapid urbanization across emerging markets are all pulling copper higher. But 2025 added another layer: tariff-driven stockpiling in the US drove massive inflows of refined copper into the country, swelling inventories to 750,000 metric tons.

Looking at China specifically, the real estate sector remains weak—home prices are forecast to fall 3.7 percent in 2025 and continue sliding into 2026. Yet China’s economy overall stayed resilient, posting robust growth and planning to expand its electricity grid, upgrade manufacturing, and invest heavily in renewables and AI data centers. These copper-intensive sectors will more than offset property market weakness.

Natalie Scott-Gray, senior metals demand analyst at StoneX, highlighted the “perfect storm” forming: easing China-US tensions, lower US interest rates, and China’s new five-year plan (2026–2031) combining to boost demand. “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.”

The Math Points to Persistent Deficits

Here’s what the numbers show: The International Copper Study Group forecasts mine production will rise just 2.3 percent to 23.86 million metric tons in 2026, while refined production creeps up only 0.9 percent to 28.58 million metric tons. Yet refined copper demand is expected to grow 2.1 percent to 28.73 million metric tons—creating a 150,000 metric ton deficit by year’s end.

The Wood Mackenzie report adds more context: copper demand will surge 24 percent by 2035, reaching 43 million metric tons annually. Balancing that requires 8 million metric tons of new supply plus 3.5 million metric tons from scrap—a massive undertaking when new projects like Arizona Sonoran’s Cactus and the Rio Tinto-BHP Resolution joint venture are still years away.

Lobo Tiggre, CEO of IndependentSpeculator.com, called copper his highest-conviction trade for 2026, predicting deficits will widen over the next couple of years as demand growth outpaces supply fixes that take time to implement.

What Happens to Prices When Supply Tightens This Much?

StoneX’s analysis suggests average copper prices could climb to $10,635 per metric ton in 2026, with upside potential beyond that. Low inventory levels, mine deficits, and concentrated supply risks all support a bullish case.

Higher prices will start pushing some buyers to look for alternatives. How much is aluminum worth per pound in this context? When copper premiums stay elevated, industries with flexibility may explore aluminum substitution for certain applications, though Scott-Gray noted practical limitations exist. Others might shift to “just-in-time” purchasing from bonded warehouses or smelters directly, bypassing traditional exchange routes.

A London Metal Exchange poll showed 40 percent of respondents believe copper will be the best-performing base metal in 2026.

The Takeaway

The copper deficit isn’t a blip—it’s structural. Supply disruptions run deep into 2026 while demand keeps accelerating. With tariff uncertainty potentially returning, regional price differences widening, and physical premiums hitting record levels, the stage is set for meaningful copper price appreciation. The market imbalance suggests this story has legs well into 2027 and beyond.