After Gold and Silver, Copper Breaks Price Records: Is a Historic Metals Supercycle Taking Shape?

If gold and silver are often seen as barometers of inflation and macroeconomic uncertainty, copper – the backbone metal of modern industry – is quietly asserting itself as the central force of a new global commodities upcycle. As 2025 draws to a close, copper prices have repeatedly shattered previous records, far exceeding expectations set just a year ago. More importantly, there are few signs that this rally is losing momentum.

On December 12, spot copper prices hit an all-time high of USD 11,816 per tonne, while three-month futures traded around USD 11,515 per tonne. Since the start of the year, copper prices have surged by approximately 36%, with a further 9% gain in just the past month—a pace strong enough to unsettle even seasoned market participants.

According to analysts at the London Metal Exchange (LME), this is not merely a short-term cyclical spike, but rather a reflection of a profound structural shift in global copper supply and demand, driven by electrification and the rapid expansion of artificial intelligence.

Exploding Demand: Electrification, AI, and an Unprecedented Copper Appetite

In its latest outlook, Citigroup argues that copper is entering a new demand supercycle, powered by three key forces: the global energy transition, large-scale grid expansion, and the rapid build-out of data centers supporting AI.

Unlike previous commodity booms, copper demand this time is not solely tied to traditional economic growth, but to its irreplaceable role in clean energy infrastructure. Electric vehicles, battery storage systems, wind turbines, high-voltage transmission lines, and energy-hungry data centers all require vast quantities of copper for wiring, power transmission, and cooling systems.

A senior analyst at Shanghai Metals Market (SMM) noted:

“If oil was the fuel of the 20th century, copper is the strategic material of the 21st. No other metal combines conductivity, durability, and economic efficiency at an industrial scale the way copper does.”

Citigroup forecasts copper prices reaching USD 13,000 per tonne in early 2026, with the potential to climb as high as USD 15,000 per tonne by the second quarter, should demand outpace current expectations—levels that would have seemed overly optimistic just a few years ago.

An Unusual Catalyst: Tariffs, Stockpiling, and the Race for Supply

Beyond strong fundamentals, the copper market is also being shaped by policy and geopolitical considerations. According to multiple LME market sources, the United States has been accelerating its accumulation of refined copper, taking advantage of price differentials to strengthen long-term supply security.

Andrew Glass, CEO of Avatar Commodities, describes the current rally as “highly unusual,” noting that it is not driven purely by physical supply-demand dynamics, but by expectations around future trade policy. Concerns that the U.S. may impose tariffs on refined copper imports from 2027 onward have prompted a rush of metal into the country, draining availability from international markets.

This view is echoed by Natalie Scott-Gray, senior metals analyst at StoneX, who points out that much of today’s market tightness stems from U.S. tariff-related fears, particularly regarding non-U.S. supply. StoneX estimates that U.S. refined copper imports have risen by roughly 650,000 tonnes this year, pushing domestic inventories to around 750,000 tonnes.

With U.S. copper prices trading at a premium to other regions, traders have strong incentives to divert shipments to the American market, further tightening supply elsewhere.

Supply Under Pressure: Structural Bottlenecks from Mine to Smelter

On the supply side, copper is facing mounting structural challenges. Deutsche Bank has labeled 2025 “a year of severe disruption” for the copper market, as major mining companies are forced to downgrade production forecasts amid rising costs, declining ore grades, and persistent operational issues.

The bank estimates that recent revisions alone have cut projected 2026 copper output by around 300,000 tonnes. Notably, Deutsche Bank expects mine supply to be weakest in Q4 2025 and Q1 2026, coinciding with peak demand—creating the conditions for the most acute supply deficit of the cycle.

Recent announcements from mining giants reinforce this outlook. Glencore has reduced its 2026 copper production guidance to 810,000–870,000 tonnes, citing lower-than-expected output from its Collahuasi mine in Chile. Meanwhile, Rio Tinto forecasts 2026 production of 800,000–870,000 tonnes, down from earlier expectations.

From an Asian perspective, Citic Securities estimates that the global refined copper market could face a deficit of up to 450,000 tonnes by 2026. The firm argues that copper prices must average above USD 12,000 per tonne next year to attract sufficient investment into mining and smelting capacity. Without sustained high prices, supply constraints could persist well into the latter part of the decade.

High Prices, Economy-Wide Implications

Despite the bullish outlook, analysts caution that persistently high copper prices carry broader economic consequences. Ewa Manthey, commodities strategist at ING, warns that elevated copper prices will compress margins for energy-intensive industries, including construction, electrical equipment manufacturing, and automotive production.

According to LME analysts, if copper prices remain elevated through 2026, higher input costs could slow the pace of energy transition in some emerging economies, where the ability to absorb rising costs is more limited.

Copper: From Industrial Metal to Strategic Asset

Taken together, these trends suggest a fundamental shift in how copper is perceived. No longer just a cyclical industrial metal, copper is increasingly being reclassified as a strategic asset, closely tied to energy security, digital infrastructure, and geopolitical competition.

Analysts at SMM note that the current cycle bears similarities to past oil shocks, with one crucial difference: copper supply cannot be ramped up quickly, while demand growth is structural and long-term.

If current forecasts prove accurate, 2026 could mark a historic turning point for the global copper market, where high prices cease to be an anomaly and instead become the “new normal” in an electrified, AI-driven world.

Source: vietnamfinance and compiled from the internet.