Why Copper Futures Are Poised for Record Highs in 2026

The copper market is tightening dramatically, and analysts are increasingly confident that 2026 will see record-breaking prices. According to the International Copper Study Group, refined copper demand is projected to grow 2.1 percent to 28.73 million metric tons in 2026, while production will only increase 0.9 percent to 28.58 million metric tons. This mismatch creates a 150,000 metric ton deficit—a supply crunch that’s expected to persist and deepen.

The Perfect Storm: Multiple Supply Disruptions

The copper supply landscape has been rattled by a cascade of unexpected setbacks. The most severe incident occurred at Freeport-McMoRan’s Grasberg mine in Indonesia, where 800,000 metric tons of wet material inundated the primary block cave, killing seven workers and halting all production. Phased restart won’t begin until mid-2026, with full recovery delayed until 2027. This single disruption stands to reshape the entire market dynamic.

Simultaneously, Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo faced a seismic event that triggered flooding in May 2025. Though underground operations have partially resumed, the company will deplete its stockpiled materials by Q1 2026, forcing guidance down to 380,000-420,000 metric tons for next year—well below its prior trajectory.

BHP’s temporary closure of its Escondida mine added to the pressure, though this proved less disruptive than originally anticipated. A silver lining emerged when Panama’s government ordered a review of First Quantum Minerals’ Cobre Panama mining lease, potentially enabling restart in late 2025 or early 2026, though ramp-up to full production will take time.

Jacob White, ETF product manager at Sprott Asset Management, emphasized in correspondence that these cascading outages will keep copper in structural deficit throughout 2026, fundamentally reshaping copper futures trajectories.

Demand Momentum Overwhelming Supply Gains

On the demand side, growth engines are firing on multiple cylinders. Copper consumption is accelerating due to the energy transition, artificial intelligence infrastructure expansion, and rapid urbanization across emerging markets. China’s 15th five-year plan (2026-2031) signals renewed policy focus on electrical grid upgrades, manufacturing modernization, and data center buildouts—all copper-intensive sectors.

While China’s property market continues its prolonged weakness with home prices expected to drop 3.7 percent in 2025 and further decline into 2026, this headwind is more than offset by high-tech export growth and infrastructure investment. The Chinese economy posted robust performance in 2025 with 4.9 percent growth and is forecast to achieve 4.8 percent expansion in 2026.

US tariff concerns created artificial demand spikes in 2025, with refined copper inflows surging as traders front-loaded imports. Natalie Scott-Gray, senior metals demand analyst at StoneX, noted that US inventory reached 750,000 metric tons—a historically elevated level. However, even as tariff-related distortions ease, underlying demand fundamentals remain constructive. Scott-Gray identifies a “perfect storm” forming: easing China-US tensions, Federal Reserve rate cuts, and China’s five-year investment priorities are all converging to boost copper appetite.

The Structural Deficit Widens Over Years

The supply-demand imbalance extends well beyond 2026. According to Lobo Tiggre, CEO of IndependentSpeculator.com, copper represents his highest-confidence trade for 2026, as demand growth fundamentally outpaces new supply additions. Mine repairs and new project startups take years to execute, meaning supply deficits are poised to broaden through 2027 and beyond.

Wood Mackenzie forecasts copper demand will surge 24 percent by 2035, reaching 43 million metric tons annually. To rebalance markets, 8 million metric tons of new supply and 3.5 million metric tons from scrap are required. Yet the pipeline remains constrained. Arizona-based projects like Arizona Sonoran Copper’s Cactus mine and the Rio Tinto-BHP Resolution joint venture are still multiple years from production. A United Nations Conference on Trade and Development report notes that meeting the 40 percent demand growth projection by 2040 requires $250 billion in capital and construction of 80 new mines—an enormous undertaking.

Compounding these challenges, half of global copper reserves are concentrated in just five countries (Chile, Australia, Peru, the DRC, and Russia), each facing geopolitical risks, declining ore grades, and extended permitting timelines.

Pricing and Copper Futures Outlook

The forecasted market deficit is already reflected in copper price expectations. Scott-Gray projects average prices could climb to $10,635 per metric ton in 2026, with spot prices reaching even higher levels during supply crunch periods. High physical premiums and regional price differentials are likely to remain elevated.

Investors positioning through copper futures will need to account for several dynamics. First, low inventory levels and ongoing mine deficits will support floor prices. Second, tariff threats may persist, keeping premiums elevated. Third, high prices may trigger demand destruction in price-sensitive sectors, though substitution opportunities (such as aluminum) are limited by technical constraints.

StoneX’s London Metal Exchange survey found that 40 percent of respondents selected copper as the best-performing base metal for 2026, underscoring market conviction around the tightening outlook.

Investment Implications

For traders and investors, the copper setup for 2026 boils down to elementary supply-demand math: production growth is insufficient to meet demand expansion, leaving the market in persistent deficit. Supply disruptions that won’t fully resolve until 2027 or beyond, combined with accelerating demand from digital infrastructure and renewables, create a multi-year tailwind.

Market participants may pursue “just-in-time” purchasing strategies from alternative sources like bonded warehouses or direct smelter deals to manage costs. Some industrial users might test aluminum swaps where feasible. However, these tactical maneuvers cannot close the structural gap. The copper deficit remains the dominant theme shaping copper futures and broader base metals markets through 2026 and into the following years.