The price of copper has shattered records, surging past the US$12,000 per ton mark for the first time ever. This historic rally, which has seen the metal gain more than a third in value this year, is being driven by a potent mix of severe mine disruptions and trade dislocations linked to former U.S. President Donald Trump's tariff agenda. The metal is now on track for its largest annual gain since 2009.
A Market Upended by Trade and Tragedy
On the London Metal Exchange, prices climbed as much as two per cent to US$12,159.50 a ton. The specter of potential U.S. tariffs on copper imports has been a central catalyst, triggering a surge in American buying. This has forced manufacturers in other regions into a fierce bidding war to secure supplies, upending traditional global trade flows.
Remarkably, this price surge is occurring even as underlying demand from China—which consumes roughly half the world's copper—has deteriorated rapidly. Typically a barometer for global industrial health, copper's rally is now largely decoupled from this slowdown. Instead, traders are shipping massive volumes to the U.S. to front-run potential tariffs, creating artificial scarcity and propelling prices higher.
The Deepening Supply Crisis
While global inventories remain sufficient for the moment, analysts are sounding alarms about the future. Morgan Stanley warns that the global copper market will face its most severe deficit in over 20 years next year. This looming shortage adds further fuel to the rally, compounded by a series of catastrophic operational setbacks at major mines worldwide.
The supply chain has been throttled by a string of disasters. In the Democratic Republic of Congo, the prolific Kamoa-Kakula complex—co-owned by Ivanhoe Mines Ltd. and Zijin Mining Group Co.—suffered a major setback in May when seismic activity triggered flooding in an underground mine.
Tragedy struck again on July 31 at Codelco's El Teniente mine in Chile, where a rock blast claimed six lives, halting operations for over a week. This accident, the Chilean industry's worst in decades, has jeopardized the state-owned producer's efforts to recover from a prolonged slump. Adding to the woes, a massive fatal mudslide knocked Freeport-McMoRan Inc.'s Grasberg mine in Indonesia offline in September.
These disruptions have led numerous mining companies to lower their production guidance. Deutsche Bank forecasts a three per cent drop in output from the world's largest miners this year, with a potential further decline in 2026.
Structural Demand Meets Constricted Supply
Copper's fundamental role in the modern economy underpins its long-term value. As one of the world's most ubiquitous metals, it is essential in almost every electrified application. The global push for green infrastructure—including electric vehicles, grid upgrades, and renewable power—has created sustained demand.
More recently, investors are betting that copper usage will surge to feed the enormous power needs of the booming artificial intelligence industry. This structural demand growth is colliding with the acute supply constraints, setting the stage for sustained market tightness and price volatility for the foreseeable future.
