Since June, copper prices have surged once more. On June 1, LME copper closed at $13,897 per ton, while COMEX copper settled at $14,485 per ton, marking daily gains of 2.0% and 2.8%, respectively. The following day, COMEX copper prices even spiked to $6.649 per pound (equivalent to approximately $14,658 per ton) during intraday trading, with the price gap between LME and COMEX copper widening to nearly $700 at one point. Shanghai copper also followed suit, breaking through the 107,000 yuan per ton mark, with the main contract reaching a new high for this phase.

After rising by approximately 35% throughout 2025, copper prices maintained their upward trajectory in 2026, with year-to-date gains reaching around 10%. In mid-May, prices even hit a historic peak of $14,153 per ton.

Behind copper's return to historic highs lies a 'triple resonance' of mine shutdowns, tariff-driven hoarding, and the new energy boom, which is reshaping global copper supply and demand with unprecedented intensity.

01. From 'Copper for the Economy' to 'Copper for the Future'

Copper, renowned for its excellent electrical and thermal conductivity, malleability, and corrosion resistance, is the world's second-most-used industrial metal, trailing only aluminum. According to agency forecasts, in China's 2025 copper downstream consumption, the power sector accounts for 43% of total national consumption, followed by transportation (15%), home appliances (13%), mechanical and electronic products (11%), and construction (11%). However, as we enter 2026, this traditional demand landscape is undergoing rapid transformation.

From a global perspective, copper demand is experiencing structural changes. Data from the International Copper Study Group (ICSG) indicates that global refined copper consumption grew by approximately 3% in 2025 and is expected to increase by a further 2.1% in 2026. China dominates the global copper market—in 2025, China's refined copper production reached 14.72 million tons, up 10.4% year-on-year, accounting for 47% of the global market share, while its consumption accounted for over 57% of the global total.

On the demand side, power grid requirements remain the most stable. In January 2026, State Grid officially announced that total fixed asset investment during the '15th Five-Year Plan' period would reach 4 trillion yuan, up approximately 40% from the '14th Five-Year Plan.' China Southern Power Grid also allocated 180 billion yuan in fixed asset investment for 2026, marking five consecutive years of record highs, with a focus on new power system construction.

According to statistics, total national grid investment during the '15th Five-Year Plan' period is expected to exceed 4.1 trillion yuan, with average annual investment remaining above 800 billion yuan. Tonghui Futures research reports that in 2026, electrolytic copper terminal demand will follow a pattern of 'stabilization in traditional sectors and rise in emerging sectors,' with global demand expected to exceed 29 million tons, nearly half of which will come from power investment.

Demand from the new energy vehicle (NEV) sector is also significant. Data shows that China's NEV copper demand grew from 138,800 tons in 2019 to 1.5036 million tons in 2025, with a compound annual growth rate of 48.76%. Agencies predict that China's NEV copper demand alone will reach 1.84 million tons in 2026 and is expected to surpass 2 million tons in 2027.

Currently, AI data centers represent the most explosive 'new variable.' Bloomberg reports that copper is now being traded like AI tech stocks such as Nvidia—conductive metals required for data centers, transmission lines, and transformers are highly tied to the AI investment boom.

JPMorgan predicts that global AI data centers will drive an additional 475,000 tons of copper demand in 2026. Commodity trader Mercuria similarly expects AI-related copper demand to grow by approximately 350,000 tons in 2026, with growth comparable to the trajectory of China's electric vehicle and renewable energy sectors. Global data center copper consumption is expected to reach 740,000 tons in 2026 and 1.3 million tons by 2028.

It is reported that a single AI server uses 15 to 25 kilograms of copper, roughly three times that of traditional servers. A 1 GW Nvidia AI data center requires 12,000 to 16,000 tons of copper, with 75% used in power distribution systems, 22% in high-speed connectivity systems, and about 3% in liquid cooling systems.

As commodity trader Trafigura predicts, by 2030, AI and data center-related copper demand could reach 1 million tons, equivalent to the annual output of a mid-sized copper-producing country. Copper's role in data centers extends beyond traditional 'wiring'—from internal server power distribution boards, copper cables, and high-speed connectors to copper tubing and heat exchangers in liquid cooling systems, every bit of AI computing power relies on copper.

02. Supply Limits Under 'Triple Blows'

While the demand side presents a 'triple resonance' of power, new energy, and AI, the supply side is undergoing a rare 'multi-collapse,' creating a perfect supply-demand price gap (referring to the widening gap between supply and demand).

First, global major mine restarts have stalled. The most fundamental supply-side variable driving this round of copper price increases is the 'hard shortage' from the mining sector. The world's two largest copper mines—Grasberg in Indonesia and Kamoa-Kakula in the Democratic Republic of the Congo—have yet to resume full production following 2025 production incidents, with the latest assessment indicating a return to normal levels only by 2028. Bank of China Securities notes that Grasberg's full restart has been delayed from early 2027 to early 2028, with 2026 capacity maintained at only 40-50%, reducing global copper mine supply by 400,000 to 450,000 tons. Goldman Sachs has thus slashed its 2026 global mine supply forecast by 350,000 tons, equivalent to about 1.5% of total global mine supply.

Meanwhile, Chilean copper mine production is also under pressure. Data from Chile's National Copper Commission (Cochilco) shows that Codelco's copper output fell 9.98% year-on-year in March, while output at BHP's Escondida mine—the world's largest copper mine—dropped 15.75% year-on-year in the same month. The ICSG predicts that global copper mine output will grow by approximately 2.3% to 23.86 million tons in 2026, but the increase will mainly come from production improvements at existing projects and new project startups, significantly offset by declining grades at older mines and operational disruptions. The global copper concentrate market is expected to remain tight.

Second, smelters face extreme margin squeezes. Data shows that copper concentrate treatment charges (TCs) have fallen to between -$107 and -$103 per ton, hitting record lows.

This means smelters are not only unable to earn processing fees but must pay miners for raw materials. This extreme margin squeeze has completely reshaped the smelting industry's structure and operating model, rendering the traditional processing fee-based profit model obsolete. Affected by sustained negative TCs, China's copper concentrate imports fell 19.57% year-on-year in April, the first year-on-year decline in more than five years. Smelters are maintaining operations under extreme negative TC conditions but face significant profit pressures.

Third, scrap copper and by-product supplies are doubly constrained. Scrap copper, which could serve as a supply-side buffer, is also facing obstacles this year. Domestic scrap copper production fell 12% year-on-year in the first few months of the year. The full implementation of 'reverse invoicing' domestically has led to persistent shortages of invoiced scrap copper, while previous copper price declines prompted holders to withhold sales, further tightening scrap copper supplies. In late March, the price differential between refined and scrap copper briefly turned negative, with domestic copper social inventories declining by 63,000 tons in a single week that week, confirming the supportive role of reduced scrap copper substitution on refined copper consumption.

Meanwhile, geopolitical conflicts in the Middle East have disrupted sulfur supplies—a key raw material for hydrometallurgical copper smelting in Africa. Copper hydrometallurgy costs in the Democratic Republic of the Congo have reached approximately $7,000 per ton, up about 47% from late last year, putting overseas hydrometallurgical copper capacity at significant risk of contraction. Overall, nearly every link in the copper supply chain—from raw materials to smelting to recycling—is being tested.

03. Global Liquidity Reconfiguration Driven by 'Copper Hoarding'

If mine production cuts represent the 'root cause' of copper supply tightness, the 'copper hoarding' triggered by U.S. tariff expectations is accelerating the depletion of available inventories in global markets outside the United States.

Since the Trump administration requested a U.S. Department of Commerce investigation into copper imports in 2025, market expectations for U.S. tariffs on refined copper have continued to rise. The U.S. Department of Commerce must submit its latest copper market assessment report to the White House by June 30, 2026, and recommend whether to impose import tariffs on refined copper. As this deadline approaches, the COMEX-LME price differential has widened from parity in January-April 2026 to nearly $600-$700.

This widening differential has directly driven large-scale cross-market arbitrage. Traders are 'racing against time' to ship copper to the United States before policy implementation—COMEX inventories increased by a cumulative 405,000 short tons throughout 2025, and as of June 1, 2026, COMEX copper inventories had risen to a record high of 642,000 short tons. Goldman Sachs analysis indicates that U.S. copper imports in the first half of 2026 far exceeded expectations, with full-year U.S. copper inventory accumulation projected to rise from 550,000 tons to 900,000 tons.

Once this copper enters U.S. warehouses, it becomes 'locked away' and no longer flows to international markets such as the LME. London copper prices now reflect a further compressed global supply. Goldman Sachs has thus sharply raised its supply deficit forecast for copper markets outside the United States from just 60,000 tons previously to 640,000 tons, with the 2027 deficit forecast also revised upward from 40,000 tons to 170,000 tons.

On May 22, over 50,000 tons of copper were withdrawn from LME warehouses in a single day—the largest concentrated withdrawal since 2013—all destined for the United States. Current LME available copper inventories have fallen to about 275,000 tons, a roughly 10-week low, with registered warrants rising to 30%, indicating accumulating squeeze risks. CITIC Securities recently judged in a research report that 'tariff trading' and inventory hoarding have returned as the main drivers of the copper market, with the explicit emergence of 'speculative' inventory hoarding demand set to drive copper sector strength, with year-to-date copper price highs potentially challenging $15,000 per ton.

Gu Fengda, chief analyst at Guosen Futures, pointed out that tariff expectations have sparked concerns over global trade reconfiguration, prompting behaviors such as advance stockpiling and cross-regional transfers, further amplifying tight supply expectations in the copper market.

04. Valuation Shift: From 'Cyclical Commodity' to 'Strategic Resource'

High copper prices are having profound differentiated effects across the industrial chain.

Upstream mines are undoubtedly the biggest beneficiaries of this round of copper price increases. Rising copper prices directly translate into profit growth, with the mining index for upstream resources surging 104% in 2025, significantly outperforming the broad-based non-ferrous metals index covering midstream and downstream sectors. Major domestic copper mines such as Jiangxi Dexing Copper Mine are operating at full capacity, while high prices have also increased the economic viability of low-grade ores, prompting companies to step up exploration efforts.

The midstream smelting sector faces a starkly different picture. With processing fees mired in negative territory, even with 'lifeline' revenue from sulfuric acid by-products, smelters' profit margins remain severely squeezed. The industry is shifting from a traditional model reliant on processing fees toward integration with upstream resources, deepening smelting technology, and pursuing high-end processing.

The downstream processing sector is experiencing a tale of two markets. High-precision copper strips for AI servers and high-voltage flat wires for NEVs are in full order, with production schedules booked through late 2027. However, traditional copper material processing—particularly for end markets like real estate and general manufacturing—is under pressure from high copper prices and order losses. The threat of substitute materials accelerating penetration is also growing, with trends such as aluminum replacing copper and composite material substitution emerging in some areas.

From a medium-to-long-term perspective, copper's fundamental logic is shifting from 'macro-cycle driven' to 'dual-driven by industrial trends and geopolitical game theory (geopolitical competition).' Insufficient mining sector capital expenditures and lengthy new mine development cycles mean the supply-side rigid deficit is unlikely to be resolved effectively before 2027-2028. Meanwhile, long-term demand from AI computing power, new energy transitions, and grid upgrades confers structural resilience to copper consumption beyond economic cycles.

As CITIC Securities states: 'We strongly recommend configuration opportunities in the copper sector, where profit elasticity and valuation elasticity are resonating.' Goldman Sachs also emphasizes in its research report that AI, data centers, defense, and energy security are becoming the primary drivers of copper demand, with these sectors' low sensitivity to economic slowdowns set to reshape copper's valuation framework.

However, it must be recognized that sustained high copper prices are also eroding downstream demand elasticity, with significant crowding-out effects evident in price-sensitive traditional manufacturing sectors. Whether copper prices can truly break through $15,000 per ton depends on the pace of tariff policy implementation, actual mine restart progress, sulfuric acid supply chain stability, and changes in macroeconomic expectations.

The ongoing supercycle in the copper industry, propelled by the burgeoning demand for AI computing power, the global shift towards new energy sources, and growing concerns over resource security, is poised to emerge as one of the most captivating structural trends within the global commodity markets come 2026.

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