Copper Prices Poised for Higher Highs Amid Declining Global Supply
Copper prices are poised to reach new heights over the next three years due to strong global demand and a projected decline in mined production by 2026. Driven by consumption in China, where the Yangshan copper premium has hit $121 a tonne, its highest level since November 2022, and the broader energy transition, the metal has already gained 45% globally over the past 12 months.
US copper prices have risen 48%, with Chinese demand remaining robust. The energy transition, artificial intelligence, and data centers are fueling overall consumption. On the supply side, global mined copper production is expected to fall in 2026 for the first time since 2017, driven by operational setbacks, lower ore grades, and mining disruptions.
Chile, which accounts for 23% of global copper, is forecasted to see a 6.5% drop in mine output in the first half of 2026, following a 9.4% year-on-year decline in July. The Chilean state copper commission, Cochilco, predicts a total production decline of 2.6% for 2026, while BHP's Escondida mine estimates a drop of 1 million to 1.1 million tonne.
Supply constraints extend beyond South America, with Indonesia and the Democratic Republic of Congo projected to see a combined decline of 0.6 million tonne, representing nearly 2.5% of global supply. Consequently, Deutsche Bank and Citi forecast supply growth of just 1% to 1.3%, respectively, against an expected mining decline of 1% to 1.5% across 2026 and 2027, creating a market deficit.