Copper Price Falls Amid Declining Mine Supply and Growing AI Demand

The price of copper has been falling despite an optimistic outlook from economist Steve Hanke. In his note six days ago, he told followers to stay long on copper, citing a potential shortage due to declining mine supply.

This year could mark the first annual decline in copper supply since 2017, according to Morgan Stanley. Global mine output fell 1.1% in the first half of 2026, with Freeport-McMoRan's Grasberg mine running at roughly half capacity after a fatal landslide.

The company cut its 2026 guidance for copper from 1 billion pounds to 700 million, and Chile trimmed its national forecast by 2.6% for the second consecutive quarter. Average ore grades have slipped from around 1.6% in 1990 to below 0.6% at many major mines.

AI data centers are also pulling metal off the market, with a megawatt of capacity requiring 60-75 tons of copper. Analysts estimate AI facilities could add roughly 475,000 tons of demand this year, leading to forecasts varying wildly from a 600,000-ton deficit to a 150,000-ton gap.