Copper futures on the London Metal Exchange (LME) skyrocketed to a record high in a volatile session following the Christmas holiday, capping an extraordinary year of gains fueled by acute global supply fears and shifting trade flows.
Volatile Trading Sees Record Surge
In the initial minutes of trading on December 28, 2025, LME copper prices jumped as much as 6.6%, marking the biggest intraday gain since 2022, to approach US$13,000 per metric ton. The metal later pared gains, closing 0.5% higher at US$12,222 a ton. Meanwhile, New York futures fell, erasing much of a five per cent gain from the previous trading day.
Perfect Storm of Supply Disruptions and Trade Winds
The rally has been propelled by a confluence of severe, unplanned mine outages and renewed trade policy uncertainties. Recent disruptive events include:
- A deadly accident at the world's second-largest copper mine in Indonesia.
- An underground flood at a major operation in the Democratic Republic of Congo.
- A fatal rock blast at a mine in Chile.
Compounding the physical tightness, U.S. President Donald Trump's plan to revisit tariffs on primary copper in 2026 has triggered a fresh rush of shipments to the United States. This arbitrage trade is draining metal from the global market, tightening availability elsewhere.
Long-Term Demand Clashes with Short-Term Weakness
Long-term demand fundamentals for copper remain robust, underpinned by global electrification, power grid expansion, and energy infrastructure needs. Investors are also betting on growing consumption to meet the power demands of artificial intelligence data centers.
However, immediate demand in China, the world's top copper consumer, has softened. Some Chinese fabrication plants sensitive to high prices have cut output or halted production, according to Wu Kunjin, head of base metals research at Minmetals Futures Co.
"It still feels like this is all about expectations," Wu stated, echoing concerns from other analysts that prices have climbed too high relative to current usage.
Structural Supply Concerns Loom Large
Beyond immediate disruptions, industry analysts warn of a deeper structural issue: much of the richest and most easily accessible copper resources have been exhausted. This raises profound concerns about where sufficient new supply will emerge over the next decade to meet forecast consumption growth.
The latest surge puts copper on track for its best annual performance since 2009, a rally marked by unprecedented pressure on global smelters and persistent market tightness. While the long-term outlook for copper demand is strong, the current price spike highlights a market caught between future promise and present-day supply peril.
