Copper Prices Soar on Squeeze in Tight Market

Copper prices have surged by roughly 50% over the past year to around $14,545 per tonne, according to Sprott analyst Jacob White. This significant increase signals a structural squeeze in the copper market due to a combination of factors, including mine underperformance, collapsing treatment charges, and tariff-driven trade distortions.

The spot TC/RCs have flipped from more than $90 per tonne in late 2023 to below minus $150, with Antofagasta and BHP increasingly pricing concentrate off spot indexes as smelters bid aggressively despite negative terms. This aggressive bidding is supported by sulphuric acid and precious metal by-product revenues.

Chile's downgraded 2026 output outlook, persistent disruptions at Grasberg and Kamoa-Kakula, and US proposals for 15-30% Section 232 tariffs on refined copper, plus a separate 50% levy on semis, point to prolonged tightness and unusually strong margins for pure-play copper miners.

The current situation has led Sprott Asset Management to warn of a structurally tight fuel and metals market, with rising demand from power grids, AI data centres, and defence systems. Diversified majors with strong Latin American and Australian copper positions are likely to be favoured by investors positioning for the tariff and permitting risks highlighted here.

The sharp reversal in treatment charges implies sustained pressure on smelter margins, which can delay expansions in regions like Chile and the DRC and tighten the availability of by-product gold and silver from large porphyry systems such as Grasberg and Kamoa-Kakula.