Why Copper Will Command Premium Prices in 2026: A Shortage Story Unfolds

The stage is set for copper to experience significant pricing pressure in 2026, driven by a widening supply-demand imbalance that shows no signs of easing. Industry analysts widely expect deficits to persist, with key mining operations disrupted and new production struggling to come online quickly enough to meet surging demand. This shortage dynamic will directly influence how much is a pound of copper, pushing prices toward unprecedented levels.

Production Headwinds Persist Into Next Year

The copper mining sector faced a tumultuous 2025, with several critical incidents reshaping supply expectations for 2026. Freeport-McMoRan’s Grasberg mine in Indonesia encountered a catastrophic incident late in 2025 when 800,000 metric tons of wet material inundated its primary production block, resulting in seven worker fatalities and a complete operational halt. The company has signaled that its phased restart won’t commence until mid-2026, with full capacity not returning until 2027.

Similarly, Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo experienced flooding from a seismic event in May 2025. While partial underground operations have resumed through stockpile processing, the company has warned that reserves will deplete during early 2026. Consequently, Ivanhoe has adjusted its 2026 guidance downward to 380,000-420,000 metric tons, falling short of its prior 500,000-540,000 metric ton range planned for 2027.

Another potential source of relief appears limited in the near term. First Quantum Minerals’ Cobre Panama mine, idled since November 2023 following a contract dispute, may restart operations in late 2025 or early 2026. However, ramping back to full production will require months of staged operations, delaying any meaningful market contribution.

According to the International Copper Study Group, mine production will grow merely 2.3 percent in 2026 to reach 23.86 million metric tons—a modest increase that fails to address mounting demand pressures.

Demand Growth Continues Accelerating

Copper consumption is climbing across multiple sectors. The global energy transition, expansion of artificial intelligence infrastructure, and rapid urbanization in emerging markets all require substantial copper inputs. China’s 15th five-year plan, spanning 2026-2031, emphasizes grid upgrades, manufacturing enhancements, and renewable energy development—all copper-intensive endeavors that should offset weakness in the beleaguered real estate sector.

The Chinese economy is projected to grow 4.8 percent in 2026, supported by high-tech exports and structural economic reforms rather than property development. According to StoneX analysts, refined copper demand is expected to expand 2.1 percent to 28.73 million metric tons in 2026, outpacing the sluggish production growth rate and creating supply shortfalls.

Tariff-related demand dynamics that turbocharged 2025 consumption may normalize in 2026, but underlying secular demand drivers remain intact and strengthening.

The Mathematics Point to Record Pricing

When refined copper production is forecast to increase just 0.9 percent to 28.58 million metric tons against demand growth of 2.1 percent, the result is a structural deficit. The International Copper Study Group calculates a 150,000 metric ton shortfall by year-end 2026.

This supply crunch will significantly influence how much is a pound of copper. Analysts forecast the average price could climb to US$10,635 per metric ton—translating to approximately US$4.83 per pound at current conversion rates, representing a notable premium over historical norms. Higher price levels may dampen demand from price-sensitive consumers, potentially driving substitution toward aluminum in select applications or encouraging just-in-time purchasing strategies from alternative sources such as bonded warehouses.

Regional price differentials and physical premiums are expected to remain elevated, reflecting the underlying tightness.

Looking Ahead: A Multi-Year Deficit

New mining projects in Arizona—including Arizona Sonoran Copper Company’s Cactus development and the Rio Tinto-BHP joint venture Resolution project—remain years away from contributing material supply volumes. Meanwhile, existing mine grades are declining, reducing output from operational facilities.

A United Nations Conference on Trade and Development report indicates that meeting projected copper demand growth of 40 percent by 2040 will require constructing 80 new mines and deploying US$250 billion in capital investment. With half of global reserves concentrated in just five countries—Chile, Australia, Peru, the DRC, and Russia—geopolitical and logistical constraints will continue hampering expansion efforts.

Wood Mackenzie forecasts copper demand will surge 24 percent to 43 million metric tons annually by 2035, necessitating 8 million metric tons of new supply alongside 3.5 million metric tons from recycling to maintain market equilibrium.

Investment Implications

The confluence of constrained production, accelerating demand, and limited near-term supply solutions positions copper as a compelling trade for 2026. Low inventory levels, mine and concentrate deficits, and potential tariff complications suggest prices will remain supported and may test record highs as the year progresses.

Forty percent of respondents to a London Metal Exchange poll identified copper as the best-performing base metal for 2026, reflecting broad market confidence in the commodity’s outlook. For investors tracking how much is a pound of copper or monitoring industrial commodity exposure, the 2026 backdrop appears decidedly bullish.