Copper Prices Hit Record High Amidst Supply Deficit and Growing Demand

Copper prices have surged to an all-time high on the London Metal Exchange, reaching $14,300 per tonne in early August. According to Jacob White, Director of ETF Product Management at Sprott Asset Management, the surprise is not that copper has reached record levels, but rather how long the setup has been building.

White points out that a fundamental supply deficit has been driving up prices. He notes that new mine supply takes an average of 17.5 years from discovery to first production, making it difficult for the industry to respond quickly to demand growth. Jefferies agrees with this view, citing copper's growing importance in electrification as a key driver of scarcity.

Wood Mackenzie estimates that supporting accelerated EV growth would require $45 billion in additional greenfield metals investment over the next decade, with copper being the most constrained link. The bank warns that if established regions such as Chile and Peru don't streamline permitting and offer competitive fiscal terms, a larger share of future supply growth could shift towards state-backed Chinese entities.

On top of the supply story is a wave of tariff speculation, with the current recommendation from the Commerce Secretary calling for a 15% tariff beginning January 1, 2027. White notes that this would further exacerbate the supply deficit, as actual copper being shipped into the US is being taken out of the market at a time when we're already in a supply deficit.

Despite these challenges, explorers and developers are benefiting from higher long-term price assumptions in feasibility studies. Producers earning stronger margins are showing greater appetite for M&A, often preferring to acquire advanced projects rather than wait out the 17.5-year path from discovery to production.