Copper Prices Soar on Supply Shortage Fears

Copper prices have surged to record highs this week, reaching $14,779 per ton on the London Metal Exchange and $3.74 per pound in New York futures. The red metal has gained nearly half its value over the past year and is up about 51% over the past 12 months.

While tariffs have been cited as a reason for the price increase, experts argue that this explanation no longer holds. In fact, the premium between New York and London copper prices has averaged only around 1% all year, which is significantly lower than the 23% premium seen during last summer's tariff-related trade.

Chile, one of the world's largest copper producers, has reported its weakest second quarter in at least 19 years and cut its full-year forecast for a second consecutive quarter. Global mine production fell 1.1% in the first half of 2026, with output dropping in Chile, Indonesia, and the Democratic Republic of Congo.

The International Copper Study Group (ICSG) reports that global mine supply will decline by 2.6% annually, marking the first annual decline since 2017. This trend is expected to continue as the industry faces a generational problem: finding new copper deposits has become increasingly difficult and expensive. Since 2020, the industry has spent $16.4 billion searching for copper and found only 8.7 million tons.

As demand continues to surge, particularly in the AI sector where copper accounts for 82% of mineral mass in data center construction, supply chain experts are warning of a potential shortage. Bank of America estimates that each incremental megawatt of data center capacity embeds 60-75 tons of metal, mostly copper.