What's Driving Copper Prices in 2026? Supply Crisis Points to Record Highs

The copper market is heading into 2026 with a supply crunch that analysts expect will keep prices elevated for months to come. Several major mine disruptions in 2025 have created a domino effect—combined with surging demand from AI infrastructure, renewable energy grids, and economic growth in developing nations, the math is becoming increasingly bullish for copper prices per ounce and across all trading units.

The Supply Shock That Won’t Quit

The story of 2025 for copper was largely one of disruption. Freeport-McMoRan’s Grasberg mine in Indonesia suffered a catastrophic incident when 800,000 metric tons of wet material flooded into the primary block cave, killing seven workers and forcing a complete production halt. The company expects a phased restart around mid-2026, with full operations unlikely until 2027—a timeline that will leave a gaping hole in global copper supply.

Meanwhile, Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo faced its own crisis when a seismic event in May triggered flooding and mining suspensions. Though some operations have resumed, the company is now focused on dewatering efforts. Ivanhoe’s management warned in early December that its processed stockpiles will run dry in Q1 2026, forcing the company to cut guidance to 380,000-420,000 MT for the year.

BHP’s Escondida mine, the world’s largest copper operation, also suffered temporary shutdowns, though the disruptions there were less severe than at Grasberg or Kamoa-Kakula.

On the positive side, First Quantum Minerals’ Cobre Panama mine could restart operations in late 2025 or early 2026 after Panama’s government ordered a review of the mining lease. However, ramping up to full production will take time—similar to the lag expected at Grasberg.

According to Jacob White, ETF product manager at Sprott Asset Management: “Grasberg remains a significant disruption that will persist through 2026, and the situation is similar to constraints at Ivanhoe Mines’ Kamoa-Kakula. We believe these outages will keep the market in deficit in 2026.”

Demand Keeps Climbing—And It’s Not Slowing Down

On the demand side, copper consumption is accelerating across multiple fronts. The energy transition, artificial intelligence data center buildouts, and rapid urbanization in developing nations are all competing for the same limited supply of copper.

China’s economy proved more resilient than expected in 2025, with growth clocking in around 4.9 percent and 2026 guidance set at 4.8 percent. More importantly, China’s new five-year plan running through 2031 prioritizes electricity grid upgrades, manufacturing improvements, and AI-focused data center expansion—all copper-intensive sectors.

While China’s real estate market continues to struggle, with home prices expected to decline 3.7 percent in 2025 and continue falling into 2026, this weakness won’t offset the copper demand from infrastructure and tech investments. White noted: “Policy focus and capital are expected to prioritize expanding the electricity grid and upgrading manufacturing, renewables and AI-related data centers. These copper-intensive areas are set to more than compensate for a subdued property market, yielding net growth in China’s copper demand next year.”

In the US, tariff-driven import demand in 2025 also inflated consumption, pushing refined copper inventory to 750,000 MT. While this speculative buying pressure has eased since summer, uncertainty around trade policies may continue to support inflows into 2026.

A UN Conference on Trade and Development report predicts that copper demand will grow 40 percent by 2040, requiring $250 billion in investment capital and the construction of 80 new mines. Current global reserves are concentrated in just five countries: Chile, Australia, Peru, the Democratic Republic of Congo, and Russia—each facing its own geopolitical risks and operational challenges.

The Math Doesn’t Add Up—Yet

Here’s where things get interesting for price forecasts: the International Copper Study Group projects that mine production will increase just 2.3 percent to 23.86 million MT in 2026, while refined production rises only 0.9 percent to 28.58 million MT.

Meanwhile, refined copper demand is expected to grow 2.1 percent to 28.73 million MT—outpacing supply growth and creating a 150,000 MT deficit by year-end.

This supply-demand imbalance is setting up what some analysts call a “structural deficit.” Lobo Tiggre, CEO of IndependentSpeculator.com, told investors that copper is his highest-confidence trade for 2026: “Demand growth is exceeding new supply. These disruptions are taking years to fix. We’re looking at 2027; by then, the copper demand side will have kicked up even more. My base case is for copper deficits to broaden in the next couple of years.”

New supply additions—like Arizona Sonoran Copper Company’s Cactus project and the Rio Tinto/BHP joint venture Resolution project—won’t come online for several years. Wood Mackenzie forecasts that by 2035, copper demand will increase 24 percent to 43 million MT annually, requiring 8 million MT of new supply and 3.5 million MT from scrap recycling.

Price Targets: Breaking Records?

With market deficits expected to persist and even accelerate, copper prices are positioned to test record levels. Natalie Scott-Gray, senior metals demand analyst at StoneX, projects that 2026 could see average copper prices climb to $10,635 per metric ton—well above historical averages and reflecting the constrained supply backdrop.

Higher prices could also trigger behavioral shifts. Scott-Gray noted that some market participants may resort to “just-in-time” purchasing from bonded warehouses or directly from smelters to avoid paying premium ounce of copper price levels. Some manufacturers may also explore swapping copper for aluminum where feasible, though such substitutions face practical limitations.

A London Metal Exchange poll found that 40 percent of respondents believe copper will be the best-performing base metal in 2026—a vote of confidence in the bullish supply-deficit thesis.

The Bottom Line

The convergence of mine shutdowns, surging infrastructure demand, and geopolitical uncertainty creates a rare alignment for a commodity rally. The copper market is primed for a supply-constrained 2026, with prices likely to remain elevated and volatility to persist as traders navigate ongoing geopolitical tensions and policy uncertainty in major consuming regions.