Copper had a historic year in 2025. On the London Metal Exchange (LME), the copper price has risen by almost 40 percent so far, marking the strongest annual increase since 2009. Over the course of the year, the price temporarily climbed to over 11,800 US dollars per ton – around three percent above the previous record – before the market calmed down somewhat in the last trading days.
A significant driver of this copper rally was not only classic fundamentals, but also political and regulatory factors. Due to concerns about possible import tariffs of up to 15 percent under the Trump administration, significant amounts of copper flowed into the USA. According to estimates by Benchmark Minerals, around 730,000 to 830,000 tons of copper were already “economically trapped” in the US market in October – stored at the CME and hardly attractive for re-export.
“Economically trapped” refers to material that is physically available, but is not competitively removable from the USA due to the current arbitrage and premium structure. This increases the inventory at the CME, while the market in the rest of the world continues to narrow and physical premiums there increase significantly.
Analyst Albert Mackenzie of Benchmark Minerals emphasizes that the dynamic price development in 2025 was partly driven by this tariff and arbitrage issue as well as by a strong “EV–AI–Energy-Transition” narrative – i.e. the expectation of a long-term sharply increasing copper demand due to e-mobility, grid expansion, data centers and the energy transition. The market assessment of a future deficit is fundamentally understandable, but is already anticipated in many places, while the physical scarcity is still differently pronounced regionally.
Supply side: Mine problems from Grasberg to Chile
Despite the speculative component in the copper price, the supply situation remains tense. Several large mines struggled with prolonged disruptions or production cuts in 2025. In Indonesia, the operation of the huge Grasberg complex was repeatedly impaired, while in the DR Congo the Kamoa-Kakula project and in Chile the large-scale operations El Teniente and other mines such as QB2, Collahuasi or Los Bronces did not reach the originally expected production volumes.
In addition, there are structural factors: declining ore grades, more complex geology and slower ramp-ups of new projects. All this makes it difficult to keep the global copper concentrate supply stable. Smelting plants are now facing narrower concentrate margins and increased competition for available tonnages.
Large producers such as Anglo American, BHP, Glencore, Rio Tinto, Vale or Zijin have increased their investment budgets to advance new projects. However, long approval processes, rising costs and social resistance are slowing down the development of new mines. The project pipeline lacks large-scale projects that can be realized in the short term to close the gap in the supply picture.
Demand, energy transition and the role of substitution and scrap
On the demand side, copper remains the central metal of global electrification. The market is pricing in sharply increasing demands due to electromobility, charging infrastructure, power grid expansion, data centers and high-performance computers for artificial intelligence. Studies such as the “Transition Metals Outlook 2025” by BloombergNEF expect that the copper demand for the energy transition could triple by 2045. In this scenario, a structural copper deficit would already be possible from 2026; by 2050, the supply gap could add up to 19 million tons without additional investments and recycling.
At the same time, the here and now shows a mixed picture: In China, the largest copper consumer, the construction sector remained weak in 2025, and parts of the manufacturing industry also developed cautiously. High premiums and record prices led to substitution in some areas – for example, through a greater use of aluminum in certain line and cabling applications when copper prices rise far above the aluminum price.
Another buffer for the market is the increased use of scrap. Rising prices encourage the recycling of more scrap copper. Although this process is not without friction – for example, due to technical quality requirements or logistical bottlenecks – it can help to mitigate extreme price peaks when demand begins to erode due to price.
Copper also remains an important barometer metal for the overall economic situation. Statements on economic stimulus programs, trade agreements or fiscal impulses – especially from China and the USA – often generate strong fluctuations. New or expanded tariffs on copper-intensive products would further distort trade flows and could further increase the spread between LME and CME quotations.
For 2026, market observers expect a copper market that continues to be characterized by two levels: a very bullish long-term narrative and a significantly more complex short-term reality. On the one hand, there are scenarios with a structural deficit, driven by energy transition, digitization and a sluggish supply. On the other hand, the current inventory levels – especially the high inventories in US warehouses – and the possibility of substitution show that the market has not yet reached a widespread physical shortage situation.
Decisive for the further development of the copper price are likely to be some key factors:
- Trade flows into the USA: If hundreds of thousands of tons of copper continue to flow into CME-deliverable warehouses, this will exacerbate the shortage in other regions and support premiums. An unexpected tariff decision could trigger abrupt reversals here.
- Recovery of large mines: The speed with which production problems in Chile, Indonesia, Africa and other regions are resolved will largely determine whether the supply stabilizes in 2026 or remains under pressure.
- Macro environment and economic stimulus: Growth data from China, monetary policy in the USA and possible stimulus programs influence industrial demand and the risk appetite of institutional investors.
- Political volatility: As long as Donald Trump remains in the White House, analysts expect further, sometimes abrupt, price reactions to political statements, tariffs or regulatory interventions – with effects far beyond the copper market.
Analysts generally assume that the high copper price level could fundamentally remain, but accompanied by more pronounced correction phases if substitution and scrap use take hold more strongly. In copper, the structural deficit seems to be just around the corner – but the volatility is already there.
