Copper hits new all-time high as supply crunch deepens

Benchmark three-month copper futures on the London Metal Exchange surged to an all-time high of $14,533 per metric ton on Monday, surpassing the previous record of $14,527.50 set in January, as mounting concerns over mine supply and the prospect of U.S. tariffs on refined copper sent buyers scrambling for the metal. The rally continued into Tuesday, with LME copper reaching $14,694 per ton, marking a second consecutive session of record highs.economictimes+3

The copper price breakout has rippled through equity markets. Freeport-McMoRan ↗ 5.35% stock surged 7.4% in morning trading on Tuesday, with its year-to-date gain reaching 44%. The company's own sensitivity analysis indicates that each 10-cent rise in the copper price adds approximately $390 million in annual EBITDA. Peer Southern Copper ↗ 4.93% tracked a nearly identical trajectory, confirming the rally as a sector-wide response.investing

A Supply Crisis Years in the Making

The rally reflects a convergence of structural forces. Global mine production declined 1.1% in the first half of 2026, according to market analysts. Chile, the world's top producer, reported its weakest second-quarter output in at least 19 years and has cut its full-year production forecast for a second consecutive quarter, now expecting output to fall 2.6%. Morgan Stanley ↘ 0.68%, which began the year expecting mine supply to expand, now sees production remaining flat or declining — potentially marking the first annual decrease in copper mine supply since 2017.outlookbusiness+1

LME warehouse inventories have fallen roughly 40% since late May, while persistent expectations of U.S. tariffs on refined copper imports have pulled large volumes of metal into American warehouses, draining supply from the rest of the world. A less-discussed factor is a growing shortage of sulfuric acid, a key input in copper extraction, with nearly half of the world's seaborne sulfur supply originating from a Middle East disrupted by the Iran conflict.economictimes+1

AI and Electrification Drive Structural Demand

On the demand side, copper consumption is being propelled by investment in AI data centers, power grids, renewable energy equipment and electric vehicles. A single 1-gigawatt AI data center can require up to 50,000 tons of copper for power distribution, grounding and cooling systems. BloombergNEF has warned that AI-related demand alone could climb by 400,000 tonnes per year.mining+3

Citigroup ↘ 0.71% analyst Tom Mulqueen forecasts copper at $15,000 a ton by year-end, with the potential to reach $17,000 if manufacturing recovers or demand from the energy transition and data centers proves stronger than expected. Anglo American Chief Operating Officer Ruben Fernandes captured the market's central tension: "Everyone is investing in copper, everyone likes copper. Supply will come, but the question is how quickly."economictimes