Why is copper skyrocketing? The real reasons behind the price surge this year

Copper has experienced an accumulated increase of nearly 30% this year, and it’s no coincidence. Behind this movement are three forces colliding simultaneously: insatiable demand driven by artificial intelligence, fragile global supply, and now U.S. tariff policies. Let’s understand what is really happening in the markets for this red metal.

Copper Demand: the Hidden Engine of AI

When we talk about copper, many think of old pipes or cables. The reality is much more sophisticated. Copper accounts for more than half of total global demand, and its uses expand every day.

For decades, the electrical and electronic industries have consumed the majority. It’s in your mobile phone circuits, in your household appliances’ motors, in the transformers of the power grid. But here’s the interesting part: construction and housing also need tons of copper, especially in piping systems and cladding materials in modern buildings.

However, an emerging factor is redefining demand: artificial intelligence.

Why is a common metal so decisive for AI? Although copper doesn’t perform calculations like silicon in chips, it is absolutely indispensable. Inside AI chips ( such as the GPUs used by ChatGPT ), copper forms the tiny cables that transmit signals at extremely high speeds. Additionally, copper alloys dissipate heat to prevent these “brains” from overheating.

AI data centers consume massive amounts of energy. Copper is vital throughout the electrical infrastructure: cables, transformers, liquid cooling systems with copper pipes. For AI to materialize in the real world, it depends on key peripheral sectors such as electronic sensors in electric vehicles, 5G antennas and filters, and renewable energy generation and transmission networks that power all this.

In other words: the three pillars of AI — computation, energy, and infrastructure — are built on copper. The more this technology advances, the greater the global demand for this metal. It’s a long-term structural growth that markets are already discounting.

Supply: the Fragile Side of the Equation

If demand grows, supply should remain stable. But that’s not happening. This is where the market really gets nervous.

Global copper production is concentrated in a few regions. Chile and Peru, located in the Andes mountain range, are the absolute heart of global production. The world’s most important mines are there: Escondida and Collahuasi in Chile, Las Bambas and Cerro Verde in Peru. Together, they control a huge portion of global supply.

But the Andean mountain range faces increasing challenges. Mature mines are naturally losing mineral concentration. Tensions with local communities cause frequent stoppages. Meanwhile, Central Africa — especially the Democratic Republic of the Congo — has become the fastest-growing area, with ambitious projects like Kamoa-Kakula.

So, what is the real cause of the volatility? A series of unexpected disruptions at key mines:

• The second-largest mine in the world, Grasberg in Indonesia, had to halt operations after a catastrophic landslide.
• The third-largest mine, Kamoa-Kakula in the Democratic Republic of the Congo, was hit by an underground flood caused by seismic activity, halting it for almost a month. This reduced its annual production forecast by 28%.
• El Teniente in Chile, the world’s largest underground copper mine, was shut down for over a week after a collapse, causing a loss of between 20,000 and 30,000 tons.

These events have heightened the perception of supply risk in the markets.

London Metal Exchange Numbers: Withdrawals and Volatility

The volume of copper withdrawals from the (LME) has increased significantly. This reflects traders pulling physical metal from warehouses, a typical sign of supply stress. Combined with the decline in the average ore quality due to stoppages, the outlook darkens for those seeking to secure future deliveries of this metal.

Political Factors: Tariffs and the Critical Minerals List

It’s not just a market story. Politics also plays a decisive role.

The United States has significantly increased tariffs on copper imports. This directly raises the cost of global trade in the metal and forces traders to rethink their transportation routes and operational strategies, disrupting the entire supply chain stability.

Additionally, Washington has included copper in its “Critical Minerals List,” officially recognizing it as a vital strategic resource for U.S. national security. This decision has raised concerns: if the U.S. sees copper as critical, other countries will also start to stockpile reserves to secure their own supplies. This increases buyer-seller tension.

These two policies combined: tariffs that make trade more expensive + geopolitical competition for strategic supplies, have made the copper market notably more volatile.

Will Copper Prices Continue to Rise? The Big Forecasts

Major financial institutions have divergent outlooks, but all agree that the supply-demand relationship will remain fundamental.

Goldman Sachs recently revised its outlook upward. It expects an average price of $10,650 per ton by 2026, previously set at $10,710 for the first half of that year (raised from 10,415). However, it remains cautious: according to their analysis, global copper supply is still technically sufficient. The recent price rally mainly responds to market concern over a possible future shortage, not current actual deficit conditions.

Union Bank of Switzerland (UBS) offers a notably more optimistic and progressive quarterly forecast:

• March 2026: $11,500/ton
• June 2026: $12,000/ton
• September 2026: $12,500/ton
• December 2026: $13,000/ton (final target)

JPMorgan takes a middle ground, projecting $12,500 per ton for the first half of 2026, citing serious supply chain disruptions and imbalances in global inventory structures as main justifications.

Where to Trade Copper? Available Options

If you want to participate in this market, you have two main paths: futures and physical market.

Futures are traded on organized exchanges:

• LME (London Metal Exchange): The global benchmark, setting the international reference price.
• COMEX (New York): The most important futures market in North America.
• SHFE/INE (Shanghai): Reflect supply and demand conditions in Asia, quoted in yuan.

The physical market mainly occurs off-exchange (OTC), where miners, smelters, global traders like Trafigura and Glencore, and direct purchase agreements within supply chains participate.

For individual investors, the main ways to operate are: copper futures directly, ETFs that replicate these futures, CFDs (contracts for difference), and shares of copper-producing mining companies.

In conclusion, copper faces a perfect storm: growing structural demand (especially for AI), vulnerable supply with frequent disruptions, and now geopolitical policies creating perceived shortages. All of this explains why prices have risen nearly 30% this year and why the market remains attentive to each production report. Forecasts for 2026 suggest this trend could intensify, although institutions are not fully aligned on their targets.