What's Driving the 2026 Copper Rally? Supply Crunch Meets Record Demand

The copper market heading into 2026 is shaping up to be unlike anything we’ve seen in years. While 2025 saw prices swing wildly due to supply constraints and geopolitical tensions, industry experts believe the real pressure cooker is just getting started. According to the International Copper Study Group, refined copper use is projected to hit 28.73 million metric tons (MT) in 2026—outpacing mine production growth and triggering an estimated 150,000 MT deficit. That’s why traders and investors are suddenly very interested in how much one pound of copper is worth, and where prices are headed.

The Supply Side Is Fractured

Multiple catastrophic disruptions across major copper operations paint a grim picture for next year. Freeport-McMoRan’s Grasberg mine in Indonesia experienced a massive wet material inflow into its primary block cave in late 2025, killing seven workers and shutting down operations indefinitely. The company won’t restart the Grasberg block cave until mid-2026, with full operations not expected until 2027. That single mine supplies roughly 1% of global copper production—and it’s offline for months.

Meanwhile, Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo faces its own recovery. After a seismic event caused flooding in May, the company has been processing stockpiled materials to stay operational. But those reserves will dry up by Q1 2026, forcing the company to slash its annual guidance to 380,000–420,000 MT before rebounding to 500,000–540,000 MT in 2027.

Jacob White, ETF product manager at Sprott Asset Management, sees these outages persisting through 2026: “We believe these disruptions will keep the copper market in deficit throughout the year.”

There’s a sliver of hope—First Quantum Minerals’ Cobre Panama mine may restart operations in late 2025 or early 2026 after the Panamanian government ordered a review of its mining lease. However, ramping back to full production will take time, delaying relief to an undersupplied market.

Demand Keeps Climbing While China Pivots

The energy transition, AI infrastructure buildout, and data center expansion are all hammering copper demand higher. But there’s a structural shift happening in China that’s worth watching.

The Chinese property sector remains weak—home prices are expected to fall 3.7% in 2025 and continue sliding into 2026. Historically, real estate drove massive copper consumption in China. However, Beijing’s new five-year plan (2026–2031) is redirecting capital toward electricity grid upgrades, manufacturing modernization, renewables, and AI data centers—all copper-intensive sectors. While the property market weakness will continue, these infrastructure priorities should more than compensate, supporting net growth in Chinese copper demand next year.

Scott-Gray, senior metals demand analyst at StoneX, points to a “perfect storm” brewing: easing China-US tensions, Fed rate cuts, and China’s policy pivot are all expected to fuel demand. The analyst forecasts that refined copper use will grow 2.1% annually, reaching 28.73 million MT in 2026.

The Price Forecast: Record Territory Likely

With inventories at historically low levels and deficits widening, the stage is set for copper prices to surge. StoneX’s forecast pegs the average price at US$10,635 per MT in 2026—translating to roughly US$4.82 per pound of copper, up significantly from recent years. Some analysts even see prices climbing higher as the market realizes the true scale of the supply shortage.

Lobo Tiggre, CEO of IndependentSpeculator.com, calls copper his highest-confidence trade for 2026, expecting deficits to broaden over the next two years. “Demand is growing while new supply isn’t coming online fast enough. The copper crunch just keeps building,” he noted.

New projects like Arizona Sonoran Copper’s Cactus project and the Rio Tinto-BHP Resolution venture are years away from production. Meanwhile, the UN Conference on Trade and Development estimates that copper demand will jump 40% by 2040, requiring 80 new mines and US$250 billion in investment capital—a reality that underscores just how tight supplies will remain in 2026.

What This Means for Investors

The case for copper strength in 2026 is straightforward: mine production will increase only 2.3% to 23.86 million MT, while refined production climbs just 0.9%. That’s nowhere near enough to meet a projected 2.1% jump in demand. Long-term physical premiums remain near record highs, and tariff risks could persist, further tightening regional markets.

With deficits accelerating and prices potentially hitting records, 2026 is shaping up to be the year copper finally breaks out. In a London Metal Exchange poll, 40% of respondents ranked copper as the best-performing base metal for the year ahead—and they may be onto something.