Copper Price Rally Expected to Accelerate in 2026 as Supply Deficit Widens

The copper market is facing a critical inflection point as production shortfalls collide with surging demand, setting the stage for potential price records in 2026. Multiple supply disruptions that emerged in 2025 will carry forward, while structural demand tailwinds from the energy transition and artificial intelligence infrastructure remain robust.

The Supply Crisis That Refuses to Go Away

Production cuts from major mining operations have created a cascading effect across the global copper supply chain. Copper price volatility in 2025 stemmed largely from unexpected production halts, with the most severe blow occurring at Freeport-McMoRan’s Grasberg mine in Indonesia, where an underground incident resulted in seven fatalities and forced a prolonged operational shutdown. The company doesn’t expect the main block cave to resume full operations until 2027, leaving a gaping hole in global supply through 2026.

Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo faced similar setbacks after a seismic event triggered flooding. While the company has managed some recovery operations, it will exhaust its stockpiled materials by Q1 2026, reducing annual output to 380,000-420,000 metric tons—well below previous capacity targets.

A glimmer of relief may emerge from First Quantum Minerals’ Cobre Panama mine, idled since late 2023 due to a contract dispute. The Panamanian government has signaled readiness to restart operations in late 2025 or early 2026, though ramping back to full capacity will take considerable time.

According to Jacob White, ETF product manager at Sprott Asset Management, these production setbacks will cement market deficits throughout 2026: “Grasberg remains a significant disruption persisting through 2026, with similar constraints affecting Kamoa-Kakula. We believe these outages will keep the market in deficit next year.”

Demand Drivers Running Hotter Than Expected

Global demand for copper continues accelerating across multiple fronts. Energy transition projects, data center buildouts driven by artificial intelligence expansion, and urbanization in emerging markets are consuming unprecedented quantities. The 2025 surge included artificial tariff-driven imports into the US—refined copper inflows jumped dramatically, building US inventory to 750,000 metric tons.

China’s trajectory deserves particular attention. Despite a persistent real estate collapse, the broader economy proved resilient, with GDP growth reaching robust levels in 2025 and expected to maintain momentum at 4.8 percent in 2026. The country’s new five-year plan emphasizes electricity grid modernization, manufacturing upgrades, renewable energy expansion, and AI infrastructure—all copper-intensive sectors that will more than offset weakness in property development.

Natalie Scott-Gray, senior metals demand analyst at StoneX, noted: “A perfect storm is forming with easing China-US tensions, declining interest rates, and China’s new five-year plan kicking in. These factors point to sustained demand strength.”

The Deficit Tightens Further

The International Copper Study Group projects mine production will grow just 2.3 percent in 2026 to 23.86 million metric tons, while refined output climbs only 0.9 percent to 28.58 million metric tons. Demand, however, is expected to surge 2.1 percent to 28.73 million metric tons, creating a 150,000 metric ton deficit by year-end.

Looking beyond 2026, the supply crunch intensifies. A United Nations report forecasts that copper demand will expand 40 percent by 2040, requiring $250 billion in investment and construction of 80 new mines. Wood Mackenzie estimates that by 2035, demand will climb 24 percent to 43 million metric tons annually, necessitating 8 million metric tons of new supply plus 3.5 million metric tons from scrap recycling.

The challenge: half the world’s copper reserves sit in just five countries—Chile, Australia, Peru, the Democratic Republic of Congo, and Russia—each facing geopolitical risks, declining ore grades, and permitting delays. New Arizona-based projects like Arizona Sonoran Copper’s Cactus mine and the Rio Tinto-BHP Resolution venture remain years away from commercial production.

What This Means for Copper Price Outlook

With deficits expected to accelerate, copper price records appear within reach. StoneX’s base case forecasts average prices climbing to $10,635 per metric ton in 2026, with upside potential if supply disruptions extend longer than anticipated. High physical premiums and regional price differentials will likely persist, supporting robust pricing.

Market participants increasingly view copper as the premier base metal play for 2026. In a recent London Metal Exchange survey, 40 percent of respondents identified copper as the best-performing base metal for the year ahead.

Lobo Tiggre, CEO of IndependentSpeculator.com, stated his highest-conviction trade for 2026 is copper: “Demand growth is outpacing new supply additions. These supply disruptions take years to resolve, and even as some come online by 2027, demand will have accelerated further. Copper deficits should broaden significantly over the next couple of years.”

Investment Implications

The structural mismatch between constrained supply and rising demand creates a compelling backdrop for copper exposure in 2026. Low inventory levels, persistent mine deficits, and unresolved tariff uncertainty suggest regional price premiums will remain elevated. Cost-conscious buyers may increasingly turn to alternative sourcing strategies—purchasing on a just-in-time basis from bonded warehouses or direct smelter arrangements—but these workarounds cannot solve the fundamental supply shortage.

While some consumers might explore copper-to-aluminum substitution where feasible, practical applications remain limited. The combination of supply tightness, demand momentum, and limited substitution options points to sustained upside pressure on copper prices throughout 2026.