Copper Prices Skyrocket to Historic Peak Amid Global Supply Squeeze
The global copper market witnessed unprecedented volatility as prices catapulted to an all-time high before experiencing a sharp pullback. This dramatic movement underscores the intense pressures shaping one of the world's most critical industrial metals.
Record-Breaking Rally and Sudden Retreat
Copper's most active continuous contract achieved a staggering 11% surge during morning trading, reaching an unprecedented peak of $6.58 per pound. This remarkable ascent began late Wednesday night, coinciding with the opening of East Asian markets, and continued its upward trajectory around 8 a.m. ET. However, the celebration was short-lived as a steep correction brought prices back to $6.11 per pound, representing a 3.1% gain at the latest check.
This volatility represents the latest chapter in copper's remarkable recovery story. Since plummeting at the end of July, the red metal has staged an impressive 38% rally, moving in tandem with precious metals like silver and gold. Mining stocks initially mirrored this enthusiasm, with Freeport-McMoRan shares rising 0.8% after opening 9% higher, while Southern Copper climbed 2.8%.
Supply Constraints Driving Price Momentum
The fundamental supply-demand dynamics are playing out in real-time, according to Clarksons Securities analyst Roald Ross. Major producers are reporting significant production declines that are tightening global supply. Southern Copper recently forecast a 5% reduction in its 2026 copper output, while Glencore followed with even more concerning numbers—an 11% production drop in 2025 and guidance suggesting further declines in 2026.
"We see fundamentals pointing to a strong case for high copper prices in the years to come," Ross emphasized, highlighting the structural supply challenges facing the industry.
Multiple Demand Drivers Fueling Optimism
On the demand side, copper is experiencing support from multiple fronts. Traders worldwide increasingly view the metal as a growth asset with substantial upside potential, particularly as traditional safe havens like the U.S. dollar show weakness. The Shanghai Futures Exchange recorded near-record daily trading volumes, reflecting intense global interest.
Beyond traditional applications in electronics and infrastructure, copper is benefiting from the artificial intelligence revolution. The rapid buildout of AI data centers across the United States and other regions has introduced a powerful new demand driver for the conductive metal. With China consuming approximately 60% of global supply, copper has traditionally served as a proxy for Chinese economic growth, though this relationship is showing signs of strain.
Analyst Divergence and Correction Warnings
Despite the bullish momentum, analysts are divided about copper's near-term prospects. Goldman Sachs researchers have identified "speculative inflows" rather than fundamental Chinese demand as the primary catalyst behind the recent rally. Their analysis reveals weakening refined copper consumption in China in recent months, with expectations that annual growth in Chinese copper demand will remain below 3% due to anticipated slowdowns in construction activity.
Morgan Stanley analysts have noted another temporary demand driver: U.S. entities are stockpiling copper ahead of potential tariffs. Reports suggest President Donald Trump is considering implementing 15% tariffs on copper imports in 2027, escalating to 30% in 2028.
The Looming Threat of Tariffs and Market Correction
Goldman Sachs has outlined a base case predicting a price correction in the second quarter, triggered by U.S. decisions regarding refined copper tariffs. The firm notes that immediate tariff implementation would likely reduce imports, while delayed decisions would redirect attention to global markets where supply appears less constrained.
"It is also worth noting that the U.S. stockpile will likely be gradually worked down once the copper tariff policy becomes clearer," the Goldman team added, suggesting that current stockpiling represents temporary rather than sustainable demand.
The copper market stands at a critical juncture, caught between genuine supply constraints and potentially transient demand factors. While structural factors support elevated prices in the long term, the coming months may test whether current levels are sustainable or due for a significant correction.
