Copper Rally Driven by Supply Deficit and Tariff Fears

Sprott Asset Management's Director of ETF Product Management, Jacob White, weighed in on the current copper market after prices reached new record highs above US$14,300 per tonne in August 2026.

The rally is being driven by a supply deficit and traders moving physical copper into the United States ahead of a proposed 15% import tariff for January 1, 2027. White noted that earlier expectations of a higher tariff created a significant premium for US copper prices relative to European markets.

Codelco in Chile, historically the world's largest copper producer, has seen output decline over the past two decades despite higher copper prices. Developing new copper mines is a slow process, taking an average of about 17.5 years from discovery to production.

The US critical materials list addition has increased strategic government attention, including investment activity and efforts to accelerate permitting for domestic projects. Major demand drivers include electricity grid expansion, AI infrastructure buildout, and defense spending, all expected to require substantial additional copper.