2026 Copper Market: When Supply Crunch Meets Surging Industrial Demand

The copper market is heading toward a critical juncture in 2026. After a year of supply disruptions and robust demand—including from the energy transition, data center expansions powered by AI, and scrap copper recycling pressures—industry analysts are increasingly confident that deficits will deepen rather than ease. The convergence of these factors is building a compelling case for elevated copper prices throughout the year.

Why Supply Is About to Tighten Further

The headline story of 2025 was disruption. At Freeport-McMoRan’s Grasberg mine in Indonesia, a catastrophic event in late 2025 saw 800,000 metric tons of wet material flood the primary Grasberg block cave. The incident was tragic—costing seven workers their lives—and production-crippling. While the company aims to restart Big Gossan and Deep Level zones before year-end, the Grasberg block cave won’t return to full operations until 2027, with phased restarts not beginning until mid-2026.

Meanwhile, BHP’s Escondida mine, the world’s largest copper producer, experienced a temporary shutdown early in 2025, further straining global supplies.

Ivanhoe Mines faced its own crisis when seismic activity at Kamoa-Kakula in the Democratic Republic of Congo triggered flooding in May. The mine has since been processing stockpiled materials, but company guidance signals these reserves will dry up by Q1 2026. As a result, Ivanhoe is guiding for 380,000 to 420,000 metric tons of production in 2026—well below the company’s previous 500,000 to 540,000 MT range expected to resume in 2027.

On a positive note, First Quantum Minerals’ Cobre Panama mine could return to production in late 2025 or early 2026 following a government-ordered review of its mining lease. However, restarting full operations at such a complex site typically takes considerable time, meaning supply relief won’t materialize immediately.

From a scrap copper perspective, recycling operations face their own pressures as inventory tightness leaves fewer discarded materials available for processing. Scrap copper near me and globally remains in high demand but limited supply relative to mining deficits.

Jacob White, ETF product manager at Sprott Asset Management, emphasized the gravity of the situation: “Grasberg remains a significant disruption that will persist through 2026, and similar constraints at Kamoa-Kakula will continue weighing on output. These outages will keep the market in deficit in 2026.”

Demand Is Not Slowing Down

On the consumption side, copper is experiencing structural tailwinds. The energy transition alone is a multi-year demand driver, as renewable infrastructure, grid upgrades and storage systems all require substantial copper inputs. Artificial intelligence and data center buildouts are creating an entirely new source of demand that didn’t exist at this scale just years ago.

China’s role deserves scrutiny here. While the country’s real estate market remains depressed—home prices are expected to fall 3.7 percent in 2025 and continue declining—the broader Chinese economy is resilient. GDP growth is projected at 4.9 percent in 2025 and 4.8 percent in 2026. More importantly, China’s 15th five-year plan (2026-2031) prioritizes upgrades to the metals sector, electricity grid expansion, manufacturing modernization, renewables, and AI-related data centers. These initiatives are copper-intensive and will more than offset weakness in property development.

Natalie Scott-Gray, senior metals demand analyst at StoneX, pointed to a “perfect storm” forming in late 2025: easing China-US tensions, US interest rate cuts, and China’s policy pivot toward high-tech infrastructure. This combination is likely to turbocharge demand in 2026.

In the United States, tariff concerns drove significant copper imports in 2025, pushing US refined copper inventories to 750,000 metric tons. While this situation has moderated since summer, the threat of tariffs persists, creating ongoing uncertainty and potentially supporting elevated prices through premiums and regional pricing spreads.

The Math Points to Deficits and Higher Prices

The International Copper Study Group’s latest forecast paints a clear picture. Mine production is expected to rise 2.3 percent in 2026 to 23.86 million metric tons, while refined production increases by just 0.9 percent to 28.58 million metric tons. However, refined copper demand is projected to grow 2.1 percent to 28.73 million metric tons—outpacing production growth and creating a 150,000 metric ton deficit by year-end.

Wood Mackenzie forecasts even larger structural shortfalls ahead. The firm predicts copper demand will jump 24 percent by 2035, reaching 43 million metric tons annually. Closing that gap will require 8 million metric tons of new mine supply plus 3.5 million metric tons from scrap copper recycling—an ambitious target given that 50 percent of global copper reserves are concentrated in just five countries: Chile, Australia, Peru, the DRC, and Russia.

New supply projects on the horizon, such as Arizona Sonoran Copper Company’s Cactus project and the Rio Tinto-BHP Resolution joint venture, are years away from contributing material volumes. The UN Conference on Trade and Development noted that meeting 2040 demand will require US$250 billion in investment capital and construction of 80 new mines. That’s a sobering reminder of the scale mismatch between supply and demand.

Lobo Tiggre, CEO of IndependentSpeculator.com, called copper his highest-confidence trade for 2026: “Demand growth is outpacing new supply. These supply issues take years to resolve. By 2027, copper demand will have accelerated even further. My base case is for deficits to broaden over the next couple of years and continue expanding.”

Price Implications for 2026

With deficits widening, low mine inventories, and concentrate shortages pressuring the market, copper is positioned for a strong 2026. StoneX’s Scott-Gray projects an average copper price of US$10,635 per metric ton next year—a significant move from historical levels—with potential for higher prices depending on supply developments.

Already, long-term premiums are near record levels, signaling physical scarcity. As prices climb, price-sensitive consumers may shift purchasing patterns, opting for “just-in-time” buying from alternative sources like bonded warehouses or direct smelter purchases. Some industries may explore substituting aluminum for copper where technically feasible, though this switch carries its own limitations.

According to a London Metal Exchange poll cited by StoneX, 40 percent of respondents identified copper as the best-performing base metal for 2026. For investors monitoring the space, the combination of supply deficits, rising industrial demand, and geopolitical uncertainty creates a compelling setup for the year ahead.