Mine failures, looming US tariffs and speculative purchases drive copper to a new all-time high – although there was formally a supply surplus in 2025, concerns are growing about a deficit in 2026.
Copper continues record series
The copper market got off to a flying start in 2026: On Monday, benchmark futures on the London Metal Exchange (LME) climbed to around US$13,020 per tonne for the first time. This continued copper’s record rally from last year, before prices fell back into the region of around US$12,500 at the close of trading.
Copper had already experienced one of the strongest phases in its recent history in 2025. Over the year as a whole, the price rose by more than 43% – the best annual performance since 2009 – making the industrial metal classic the top performer among the base metals on the LME. New highs were marked several times, before the recent breakout above the US$13,000 mark once again underlined the dynamic.
The question now occupying market participants: Is this just a speculatively driven exaggeration – or the harbinger of a structurally scarcer copper market?
Copper supply under pressure: Mine disruptions and lack of buffers
A key driver of the current development is ongoing production disruptions in important copper mines. Already in 2025, problems in major projects such as Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of Congo caused uncertainty regarding the global copper supply.
At the beginning of 2026, these concerns have rather intensified. In Chile, a strike at the Mantoverde mine has once again drawn the attention of market participants to the risk of further failures. According to market observers, this labor dispute has triggered additional speculative activities, as traders and funds are betting on further rising copper prices.
Strategists also point to years of underinvestment in new projects and capacity expansions. In an environment of rising demand – copper is needed, among other things, for data centers, power grids and batteries in electric vehicles – the buffers in the system have shrunk. Even minor disruptions can thus leave visible traces in the market.
Commodity analysts therefore speak of a “thin air” in copper supply: The combination of mine problems, long lead times for new projects and uncertainty in important producing countries makes the metal appear susceptible to further price spikes.
US tariffs on copper: Trade flows get out of balance
In addition to the fundamentals, the US trade policy is weighing on market transparency. Already in 2025, speculation about possible US tariffs on copper imports had driven up prices on the US futures exchange. Many traders reacted by increasingly shipping metal to the United States to hedge against possible measures.
This trend has recently intensified again: The renewed threat of import tariffs has led to more copper being channeled into the US market, which is restricting availability in other regions.
Analysts at UBS estimate that the global market for refined copper was formally in surplus in 2025 – but the real flows of goods were significantly distorted by the tariff risk. According to this, the USA recently held about half of the globally recorded inventories, although the country accounts for less than 10% of global copper demand.
For other regions, this means: tighter supply and higher premiums. On the LME, the structure of the forward prices also signals bottlenecks. The spread between the spot price and the three-month contract is clearly in backwardation – a pattern that typically indicates stronger demand for immediately available goods compared to later deliveries.
Analysts at a Chinese brokerage expect the global copper market to slip into a deficit of more than 100,000 tonnes in 2026 despite the recent price rally. The combination of logistical distortions and structurally limited mine production is exacerbating the situation.
Speculative capital meets long-term bullish copper story
While much points to a real narrowing of the copper market, market observers also warn of a growing proportion of speculative capital flows. According to a base metal strategist at Marex, the current price movement is largely driven by investors who are betting on further price gains in the first quarter of 2026 after previously missing an entry opportunity “on setbacks”.
In this mixed situation, speculative positioning and fundamental uncertainties reinforce each other. On the one hand, there are years of too little investment in new capacities, ongoing mine failures and trade policy risks. On the other hand, the financial markets expect that the energy and digitalization transformation – from electromobility to AI data centers – will be followed by a permanently higher copper demand.
Strategists point out that market participants are already partially pricing in this long-term positive outlook today. Thus, it can happen that future bottlenecks are already reflected in the prices, although the physical supply is still sufficient in the short term to cover the demand – at least globally.
At the same time, the copper market remains susceptible to political decisions. New or tightened US tariffs could once again abruptly shift trade flows and further widen the price differences between the exchanges in London and New York. Conversely, a relaxation in the tariff dispute could temporarily reduce the pressure on international premiums.
One thing is certain: For copper producers or companies that are looking for new, large deposits of the red metal, there is currently as much attention and tailwind as has not been for a long time in our view! You can take a look at the exciting copper companies that we are watching on Goldinvest.de on our copper topic page.
