Why Copper Futures Rally in 2026: Supply Squeeze and Demand Boom

The copper market is bracing for a transformative year. With demand growth outpacing new supply, the metal is positioned for sustained price appreciation throughout 2026. Industry analysts point to a perfect convergence of factors: supply disruptions persisting from 2025, accelerating demand from energy transition and AI infrastructure, and growing uncertainty around tariffs and geopolitical tensions.

Demand Engine: More Than Just Economic Recovery

Copper demand in 2026 won’t rely solely on traditional drivers like construction. The real growth story centers on three pillars: the global energy transition, explosive expansion of artificial intelligence and data centers, and rapid urbanization across developing economies.

China’s economic trajectory deserves particular attention. While the domestic real estate sector remains under pressure—with home prices expected to decline further into 2026—the broader economy proved resilient in 2025. The country’s 15th five-year plan (2026-2031) signals a policy pivot toward high-tech manufacturing, renewable energy infrastructure, and AI-related data centers. These sectors are copper-intensive. According to Jacob White, ETF product manager at Sprott Asset Management, “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.”

Beyond China, the US copper market faced unusual pressures in 2025 due to tariff concerns, which drove importers to stockpile refined material. As of recent data, US copper inventory stood at 750,000 MT—elevated levels that may create downward price pressure initially. However, uncertainty around future trade policies could re-ignite import demand volatility.

Supply Crisis: Multiple Disruptions Extend Into 2026

The real story for copper futures in 2026 is on the supply side, where the disruptions are both severe and long-lasting.

Grasberg’s Catastrophic Setback: Freeport-McMoRan’s Grasberg mine in Indonesia suffered a massive setback in late 2025 when 800,000 MT of wet material flooded the primary Grasberg block cave (GBC). The incident killed seven workers and halted production. While Big Gossan and Deep Level zones are expected to restart before the end of 2025, the critical GBC won’t resume phased operations until mid-2026, with full capacity not returning until 2027. This prolonged disruption represents the most significant supply shock in the current market cycle.

Kamoa-Kakula’s Ongoing Struggles: Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo faced a seismic event and subsequent flooding in May 2025. While some underground operations have resumed, the mine is still focused on dewatering. The company has been processing stockpiled materials, but these reserves will deplete by Q1 2026. As a result, Ivanhoe’s 2026 guidance is set at just 380,000-420,000 MT of copper—well below its normalized run-rate—before ramping back up to 500,000-540,000 MT in 2027.

Escondida’s Temporary Shutdown: BHP’s Escondida, the world’s largest copper mine, experienced a temporary shutdown early in 2025. While this was resolved, the incident underscored vulnerability in supply.

Cobre Panama’s Potential Relief: Some hope for supply recovery lies with First Quantum Minerals’ Cobre Panama mine, which was shuttered in November 2023 following Panama’s Supreme Court decision to cancel its mining contract. However, in September 2025, the Panamanian government ordered a lease review, with operations potentially restarting in late 2025 or early 2026. Like Grasberg, ramping to full production will take considerable time.

The Deficit Outlook: What It Means for Futuros del Cobre

According to the International Copper Study Group’s October forecast, mine production will increase just 2.3% in 2026 to reach 23.86 million MT. Refined production is projected to grow only 0.9% to 28.58 million MT. By contrast, refined copper demand is expected to rise 2.1% to 28.73 million MT—creating a 150,000 MT deficit by year-end.

Jacob White emphasizes the severity: “Grasberg remains a significant disruption that will persist through 2026, and the situation is similar to constraints at Ivanhoe Mines’ Kamoa-Kakula, which experienced output cuts this year. We believe these outages will keep the market in deficit in 2026.”

Looking further ahead, the situation may intensify. Lobo Tiggre, CEO of IndependentSpeculator.com, cited copper as his highest-confidence trade for 2026, stating: “Demand growth is exceeding new supply. These things are taking years to fix—some will take a year, some two years. We’re looking at 2027 and beyond; by then, copper demand will have kicked up even more. My base case is for copper deficits to broaden in the next couple of years, then continue broadening.”

Long-Term Structural Imbalance

The structural mismatch between supply and demand extends well beyond 2026. According to a May report by the UN Conference on Trade and Development, global copper demand is expected to grow 40% by 2040, requiring $250 billion in investment and the construction of 80 new mines. Yet half of the world’s copper reserves are concentrated in just five countries: Chile, Australia, Peru, the Democratic Republic of Congo, and Russia. Each faces challenges ranging from declining ore grades to geopolitical risk.

Wood Mackenzie forecasts that copper demand will jump 24% to reach 43 million MT annually by 2035. Meeting this demand requires 8 million MT of new primary supply plus 3.5 million MT from scrap recovery. While new projects like Arizona Sonoran Copper Company’s Cactus project and the Rio Tinto-BHP Resolution project are in development, both remain years away from meaningful production.

Price Forecast: Record Territory Likely

With deficits expected to accelerate, copper prices are positioned to test record highs in 2026. Natalie Scott-Gray, senior metals demand analyst at StoneX, projects that average copper prices could climb to $10,635 per MT in 2026, with spikes likely higher. High prices, combined with physical premiums near record levels, could alter buying patterns. Consumers may adopt “just-in-time” purchasing from alternative sources such as bonded warehouses or direct smelter arrangements.

Some price-sensitive sectors may explore copper substitution with aluminum where feasible, though Scott-Gray noted such switches have inherent limitations.

Regarding futuros del cobre specifically, the combination of low inventories, mine deficits, and regional price differentials should support sustained volatility and upward price pressure. A December London Metal Exchange poll found that 40% of respondents believe copper will be the best-performing base metal in 2026.

Investment Implications

The convergence of robust demand (driven by energy transition and AI infrastructure buildout), persistent supply constraints (Grasberg, Kamoa-Kakula, delayed new projects), and tariff uncertainty creates a compelling case for copper exposure in 2026. Low physical inventories, coupled with multi-year mine recovery timelines, suggest the deficit could persist and potentially widen.

Investors monitoring futuros del cobre should watch for developments in mine restart timelines, Chinese policy effectiveness in driving copper-intensive sectors, and any shifts in global trade dynamics. The macro setup favors higher copper prices, making 2026 a pivotal year for the metal and those positioned within the supply chain.