Why Copper Markets Are Bracing for a Tighter 2026

The copper market faces a pivotal moment heading into 2026. While 2025 saw volatile price swings driven by supply disruptions and geopolitical tensions, industry analysts increasingly agree that next year will test the metal’s fundamentals even more severely. The convergence of production setbacks, surging demand from electrification trends, and inventory pressures suggests a market in structural deficit—a recipe for sustained price strength.

The Demand Engine: More Than Just Recovery

Copper consumption isn’t merely bouncing back—it’s accelerating. The energy transition remains the dominant story, as grid expansion and renewable infrastructure require unprecedented volumes of the red metal. Artificial intelligence and data center proliferation add another layer of demand that few commodity analysts anticipated just two years ago. Meanwhile, rapid urbanization across emerging markets continues to drive construction and industrial activity.

China’s role deserves particular attention. Despite persistent weakness in its property sector—a traditional copper demand pillar—the Chinese government’s fifth five-year plan (2026-2031) prioritizes manufacturing upgrades, electricity grid expansion, and new energy infrastructure. These initiatives are expected to more than offset residential real estate headwinds. Industry observers estimate China’s copper demand could grow 4.8 to 4.9 percent annually through the next plan period, underpinned by high-tech exports and industrial modernization.

The US tariff environment adds another demand consideration. In 2025, tariff concerns drove substantial refined copper inflows into the country, inflating inventory to roughly 750,000 MT. While this dynamic may stabilize, uncertainty remains. Price-sensitive buyers could adopt “just-in-time” purchasing strategies, potentially shifting purchases toward scrap metal sources and alternative suppliers like bonded warehouses and direct smelter contracts. Understanding scrap metal prices per pound becomes increasingly relevant for both consumers and recycling operations seeking to diversify sourcing.

Production Constraints Define the Year

The story of 2026 will be written by supply disruptions that refuse to resolve quickly. Freeport-McMoRan’s Grasberg mine in Indonesia remains the primary concern. The facility experienced a catastrophic incident in late 2025 when 800,000 MT of wet material flooded into its primary block cave, halting operations and claiming seven workers’ lives. While the company plans to restart auxiliary zones before year-end 2025, the main block cave won’t resume operations until mid-2026, with full production not expected until 2027.

Ivanhoe Mines faces its own timeline challenge at the Kamoa-Kakula operation in the Democratic Republic of Congo. Seismic activity and flooding in May 2025 forced production halts that persist through current stockpile processing. Management guidance for 2026 stands at 380,000 to 420,000 MT—a meaningful decline from historical levels—before ramping back to 500,000 to 540,000 MT in 2027.

A bright spot exists at First Quantum Minerals’ Cobre Panama project, which was forced offline in late 2023 following legal challenges. Following September 2025 government approval, operations are set to resume in late 2025 or early 2026. However, similar to Grasberg, ramping back to full capacity will consume months, delaying meaningful supply contributions.

Meanwhile, the mining industry faces a longer-term headwind: new projects aren’t materializing fast enough to replace declining production from mature operations. Arizona-based developments like Arizona Sonoran Copper’s Cactus project and the Rio Tinto-BHP Resolution joint venture remain years away from production. The UN Conference on Trade and Development estimates that meeting global demand growth through 2040 will require construction of 80 new mines and US$250 billion in capital investment—a scale challenge compounded by geographic concentration, as half of global reserves sit in just five countries.

The Math Points to Deficit

The International Copper Study Group projects mine production will rise just 2.3 percent in 2026 to 23.86 million MT, while refined production grows only 0.9 percent to 28.58 million MT. Meanwhile, refined copper demand is forecast to climb 2.1 percent to 28.73 million MT—creating a 150,000 MT deficit by year-end. This supply-demand imbalance will likely intensify as 2026 progresses, with some analysts predicting deficits could broaden substantially through the remainder of the decade.

Low inventory levels amplify this tightness. With physical premiums near record highs and regional price spreads elevated, the market demonstrates genuine scarcity conditions rather than temporary dislocations.

What This Means for Prices

Industry consensus coalesces around copper reaching record territory in 2026. StoneX’s demand analysts project the average price could climb to approximately US$10,635 per metric ton, with spot prices likely to exceed this figure at points during the year. At these levels, price-sensitive buyers will face real purchasing decisions—potentially seeking alternatives, timing purchases differently, or exploring aluminum substitution where technically feasible.

Physical supply infrastructure will be tested. Bonded warehouses and direct smelter purchases may gain share as traditional exchange supplies tighten. Scrap recovery becomes increasingly economically attractive, though the sustainability of elevated scrap metal prices per pound depends on collection infrastructure and consumer willingness to recycle at scale.

Bottom Line

The copper market enters 2026 with structural tailwinds intact. Production setbacks persist, demand accelerates, inventories remain lean, and macroeconomic conditions—including potential US trade policy adjustments and China’s continued economic reopening—create a backdrop for sustained strength. While price-sensitive demand destruction and aluminum substitution present ceiling risks, the base case favors a market that remains undersupplied throughout the year, supporting prices well above historical averages.