Copper Market 2026: Supply Crunch Meets Soaring Demand as Prices Head Higher

The copper market is set up for a significant tightening in 2026. With mine production projected to grow just 2.3 percent while refined demand climbs 2.1 percent, the stage is being set for a 150,000 MT deficit—and that’s before accounting for emerging constraints on the supply side that could widen the gap further.

The Supply Crisis Deepens: Major Disruptions Reshape 2026 Outlook

Multiple production shutdowns are reshaping copper’s supply landscape heading into the new year. The situation at Freeport-McMoRan’s Grasberg mine in Indonesia remains the most critical. An incident in late 2025 when 800,000 MT of wet material flooded the primary mine block caused fatalities and halted production. The phased restart of the main block won’t begin until mid-2026, with full operations unlikely until 2027—a multi-year constraint that will keep the market undersupplied.

Similarly, Ivanhoe Mines’ Kamoa-Kakula operation in the DRC faced a seismic event that triggered flooding and suspended activities. The company has now indicated that stockpiled materials will be depleted in the first quarter of 2026, forcing production guidance down to 380,000-420,000 MT for the year before recovering to 500,000-540,000 MT in 2027.

A third supply bright spot comes from First Quantum Minerals’ Cobre Panama project, which could restart operations in late 2025 or early 2026 after a two-year government-mandated shutdown. However, ramping back to full capacity will take time, delaying meaningful relief to tight market conditions.

Analysts are clear: these disruptions will define the copper market. Jacob White, ETF product manager at Sprott Asset Management, stated that “Grasberg remains a significant disruption that will persist through 2026. We believe these outages will keep the market in deficit next year.”

Demand Growth: Energy Transition and AI Propel Copper Higher

On the demand side, copper consumption continues rising from multiple drivers. The energy transition, artificial intelligence infrastructure buildout, and rapid urbanization across emerging markets all require substantial copper inputs. China remains central to the story, despite weakness in its real estate sector.

While Chinese home prices are expected to decline 3.7 percent in 2025 and slide further into 2026, the Chinese economy proved surprisingly resilient in 2025 with 4.9 percent growth projected and 4.8 percent expected in 2026. The nation’s 15th five-year plan (2026-2031) emphasizes infrastructure upgrades, new energy development, and manufacturing improvements—all copper-intensive sectors.

“Policy focus and capital are expected to prioritize expanding the electricity grid, upgrading manufacturing, renewables, and AI-related data centers. These copper-intensive areas are set to compensate for a subdued property market, yielding net growth in China’s copper demand next year,” White explained.

US tariff concerns also shaped 2025 demand, with traders accelerating imports ahead of potential trade barriers. While this dynamic has cooled since summer, refined copper inventory in the US sits at 750,000 MT, leaving room for volatility depending on policy direction.

The Price Case for 2026: Deficits and High Premiums Support Record Levels

With supply growing 2.3 percent and demand rising 2.1 percent, the International Copper Study Group forecasts a market deficit by year-end 2026. This structural imbalance has already manifested in elevated physical premiums and regional price differentials.

Natalie Scott-Gray, senior metals demand analyst at StoneX, predicted that average copper prices could reach $10,635 per MT in 2026—a record high that would reflect both the supply-demand imbalance and regional tightness. Higher prices may also incentivize alternative approaches: consumers could shift purchasing to bonded warehouses or direct smelter relationships on a “just-in-time” basis.

The broader supply picture reinforces the bullish case. New projects like Arizona Sonoran Copper’s Cactus project and the Rio Tinto/BHP Resolution joint venture remain years from production. Meanwhile, existing mines face declining ore grades and geopolitical risks in key copper-producing regions—Chile, Australia, Peru, the DRC, and Russia collectively hold half of global reserves.

Wood Mackenzie forecasts that copper demand will jump 24 percent by 2035, reaching 43 million MT annually, requiring 8 million MT of new mine supply plus 3.5 million MT from scrap copper sources to balance markets. The scale of this challenge underscores why supply deficits are likely to persist and widen.

Scrap Copper and Market Flexibility: Alternative Sources in Focus

With primary supply constrained and prices rising, attention is turning to scrap copper as a demand management tool. Higher scrap copper prices relative to primary metal could incentivize greater recycling efforts and provide temporary relief, though scrap availability remains limited. Analysts also note that consumers may explore aluminum substitution in certain applications, though material properties limit how much switching is realistic.

Investment Implications: Low Inventory, Elevated Risk

The copper market heads into 2026 with low inventory levels, mine and concentrate deficits, and the persistent shadow of tariff threats. These factors support higher prices, with market participants increasingly bullish on copper as the best-performing base metal.

Lobo Tiggre, CEO of IndependentSpeculator.com, called copper his “highest-confidence trade in 2026,” citing demand growth outpacing new supply. “These supply issues are taking years to fix. By 2027 and beyond, copper demand will have increased further while new supply lags. My base case is for deficits to broaden over the next couple of years,” he said.

With 40 percent of respondents to a London Metal Exchange poll naming copper as the best base metal performer in 2026, the consensus is clear: supply constraints, structural demand growth, and elevated premiums are likely to keep prices elevated throughout the year.