Why Copper Markets Face Historic Tightness in 2026: What the Data Shows

The copper market heading into 2026 is shaping up to be one of the most constrained in recent memory. Mine disruptions that started in 2025 are expected to cascade into the new year, while demand continues climbing—not just from traditional construction, but from an entirely new wave driven by artificial intelligence infrastructure and global energy transition projects. The math is simple: production growth simply won’t keep pace with consumption needs.

The Supply Shock That Keeps Giving

Last year revealed how fragile copper production actually is. When a sudden flooding incident struck Ivanhoe Mines’ Kamoa-Kakula operation in the Democratic Republic of Congo in May, it didn’t just cause temporary disruption—it reshaped the entire supply calendar for 2026 and beyond. The company now projects output of 380,000 to 420,000 metric tons for 2026, down from normal run rates, with recovery not expected until 2027.

Even more significant was the catastrophic incident at Freeport-McMoRan’s Grasberg mine in Indonesia in late 2025. When 800,000 metric tons of wet material flooded into the primary block cave, killing seven workers, it set back global copper supply by years, not months. The company plans a phased restart midway through 2026, but full production won’t resume until 2027. This isn’t a quick fix—it’s a multi-year constraint.

BHP’s Escondida mine, the world’s largest copper operation, also faced temporary shutdowns. Meanwhile, new supply hopes rest on First Quantum Minerals’ Cobre Panama project, forced offline since November 2023. Even if restart orders come through in early 2026, ramping back to full capacity takes time—leaving supply tightness intact through much of the year.

Jacob White, ETF product manager at Sprott Asset Management, cut through the noise: “These outages will keep the market in deficit in 2026.” That’s not speculation—it’s the baseline scenario.

Demand: The Unstoppable Force

Here’s where the puzzle gets tighter. Copper demand isn’t contracting; it’s accelerating. Yes, 2025 saw artificial tariff-driven import surges into the US—pushing refined copper inflows to historically high levels and building inventory to 750,000 metric tons. But strip away the tariff noise, and the underlying trend is structural and powerful.

China’s economy, despite chronic real estate weakness, is pivoting toward high-tech manufacturing and new energy infrastructure. The government’s 15th five-year plan (2026-2031) explicitly prioritizes electricity grid expansion, renewable energy deployment, and data center buildouts—all copper-intensive activities. Natalie Scott-Gray from StoneX estimates that these policy-driven investments will more than offset the collapsing property sector’s reduced copper demand.

Meanwhile, the global South continues urbanizing rapidly, and the AI boom has triggered a race to build data centers worldwide. Every major tech company is competing to expand computational capacity, and every facility requires enormous volumes of copper wiring, transformers and cooling systems.

The International Copper Study Group (ICSG) projects refined copper consumption will grow 2.1 percent to 28.73 million metric tons in 2026. Production? Only 0.9 percent growth to 28.58 million MT. That’s a 150,000 MT deficit—and the trajectory is widening.

Scrap and Secondary Supply: The Overlooked Part of the Equation

While primary mine supply dominates headlines, secondary copper from recycling deserves attention. Current copper scrap price movements often lead primary market developments, signaling where demand is truly headed. High scrap prices relative to primary production actually reduce recycling incentive efficiency, meaning less old copper gets processed back into the supply chain. This feedback loop tightens overall market balance further. As primary supply constraints persist, scrap recycling margins compress, making the deficit deeper than simple production-demand comparisons suggest.

What It Means for Prices

Wood Mackenzie forecasts a 24 percent surge in copper demand by 2035, reaching 43 million MT annually. To balance that, 8 million MT of new supply must come online, plus 3.5 million MT from recycling. The math reveals the scale of the challenge: half the world’s copper reserves sit in just five countries—Chile, Australia, Peru, the Democratic Republic of Congo, and Russia. Geopolitical risks, declining ore grades, and permitting delays mean new projects take years to move from concept to production.

With inventory low, physical premiums elevated, and supply deficits accelerating, StoneX analyst Scott-Gray projects the average copper price could climb to US$10,635 per metric ton in 2026—potentially reaching all-time highs before the year ends. High premiums and tariff uncertainty may drive consumers to adopt just-in-time purchasing strategies, sourcing from bonded warehouses and direct smelter deals rather than building positions.

Lobo Tiggre, CEO of Independent Speculator, frames 2026 as his highest-conviction copper trade. “Demand growth is exceeding new supply by a wide margin,” he noted. “These disruptions take years to resolve. By 2027, demand will have climbed even higher. My base case is for deficits to broaden over the next couple of years, then continue widening.”

According to the ICSG’s October forecast, mine production rises just 2.3 percent year-over-year to 23.86 million MT in 2026. That modest increase, combined with persistent refining constraints and demand acceleration, virtually guarantees another year of market undersupply—and the kind of price environment that tests the resolve of industrial buyers and rewards those positioned ahead of time.