Copper Prices Surge Amid Supply Fears

Copper prices have reached a new record high, with three-month copper futures on the London Metal Exchange (LME) surpassing $13,000 per tonne.

This significant increase, with a 40% return over one year and an 11% jump in the last 30 days, is driven by several factors.

Traders are worried about potential new tariffs from the U.S. government, which could disrupt supply chains and limit the availability of copper in major trading hubs.

Additionally, global supply disruptions, including labor disputes, environmental regulations, and operational challenges at major mining sites, are expected to decrease production by 525,000-800,000 metric tonnes in 2025.

Strong global demand, particularly from data center expansion, renewable energy projects, power infrastructure upgrades, and the rapid growth of AI and defence infrastructure, is also supporting higher prices.

The anticipation of tariffs has already created significant price differentials in copper exchanges.

In recent years, there have been more restrictions on the trade of metals, with a 50% U.S. tax on imports of semi-finished copper products going into effect in August 2025.

Phased taxes on imports of refined copper are also expected in 2027 and 2028.

An accident at one of the world's largest mines in September and the faster-than-expected uptake of AI infrastructure could further push up copper prices.

Looking ahead, the world could face a major copper shortage as demand is projected to rise to around 42 million tonnes by 2040, up from 28 million tonnes in 2025.

Without a sharp increase in mining and recycling, global supplies are expected to fall short by more than 10 million tonnes a year, leaving nearly a quarter of total demand unmet.