Copper Prices Soar Amid Supply Chain Disruptions and Tariff Threat
Copper stocks have been quietly outperforming their AI chip counterparts in recent weeks. While everyone is crowding into the names of companies that make AI chips, copper has been making headlines with its surge to a new all-time high.
The metal's price hit $14,694 per ton on the London Metal Exchange (LME) this week, marking the longest weekly winning streak since 1994. This comes as the global supply of copper is facing significant challenges due to aging mines and declining production levels.
A key factor contributing to the copper shortage is the slow recovery from a major flood at Freeport's Grasberg mine in Indonesia, which triggered a force majeure last year. The company has since cut its 2026 output guidance by about one-third, with full recovery not expected until 2027 or 2028.
The US, which is the world's largest producer of copper, is also seeing declining production levels. Chile, another major copper-producing country, logged its weakest second quarter in at least 19 years and has cut its full-year forecast twice this year.
Freeport-McMoRan (FCX), one of the top copper stocks, has seen a significant increase in price, up over 44% on the year. Its Miami smelter is one of only two operational primary copper smelters in the US, making it a key player in the industry.
Another factor contributing to the surge in copper prices is the looming threat of a tariff on refined copper imports into the US. The Commerce Department has yet to make a recommendation on this issue, but traders are already positioning themselves ahead of a possible tax on refined copper, which could start as soon as January 2027.