COPPER PRICES SURGE TO ALL TIME HIGH

• Copper prices hit a fresh all-time high in December 2025.
• Benchmark prices crossed $12,000 per tonne on the London Metal Exchange (LME).
• Copper prices have surged over 35% in 2025, marking the biggest annual rise since 2009.
• The sharp rally has surprised markets despite moderate global economic growth.

IMPORTANCE OF COPPER IN THE ECONOMY

• Copper is a critical industrial metal.
• It is widely used in:
  • Housing and construction
  • Manufacturing
  • Power grids and electricity transmission
  • Clean energy technologies
  • Artificial intelligence infrastructure
  • Defence equipment
• Copper is often called a barometer of economic health:
  • Rising prices indicate strong demand and growth.
  • Falling prices signal economic slowdown.

KEY REASONS

• In August 2025, Donald Trump imposed a 50% tariff on:
  • Semi-finished copper
  • Derivative copper products
• These tariffs were announced ahead of implementation on August 1.

• US buyers aggressively stockpiled copper to avoid future price hikes.
• Warehouses in the US saw a sharp rise in copper inventories.
• Fear that refined copper, currently exempt, may also face tariffs pushed prices higher.

• Copper trades on multiple exchanges, including:
  • London Metal Exchange (LME)
  • COMEX (US market)
• Prices in the US rose faster than in London, creating arbitrage opportunities.
• Traders bought copper in cheaper markets and sold in costlier US markets.
• This led to a mass movement of copper stocks to New York.
• According to reports, about 340,000 tonnes of copper are now stored in New York, up from 80,000 tonnes in January.

TIGHTENING GLOBAL COPPER SUPPLY

• Global supply was hit by accidents and natural disruptions at key copper mines:
  • Indonesia:
    • Mudslide at the Grasberg mine, the world’s second-largest copper mine.
    • Force majeure declared; full production unlikely before 2027.
  • Chile:
    • A major rock blast halted operations at a large copper mine.
  • Democratic Republic of Congo (DRC):
    • Seismic activity caused severe underground flooding at a major mine.

• These disruptions reduced global copper output.
• Supply tightened sharply at a time of rising global demand.

SURGE IN DEMAND

• Rapid expansion of artificial intelligence is driving copper demand.
• Data centres require large amounts of copper:
  • Conventional data centre: 5,000–15,000 tonnes
  • Hyperscale AI data centre: up to 50,000 tonnes
• Estimates are provided by the Copper Development Association.

• The shift to clean mobility is boosting copper consumption.
• Copper usage per vehicle:
  • Conventional car: ~22.3 kg
  • Electric vehicle: ~53.2 kg
• Data provided by the International Energy Agency (IEA).

• Expansion of electricity grids and renewable energy systems requires large volumes of copper.
• Global energy transition policies are pushing long-term demand higher.

ROLE OF US DOLLAR & INTEREST RATES

• A weakening US dollar has supported copper prices.
• The dollar weakened due to expectations that the Federal Reserve may cut interest rates in 2026.
• Lower interest rates reduce the dollar’s strength.
• Since copper is priced in US dollars, a weaker dollar pushes prices higher.

DIVERGING FORECASTS ON COPPER PRICES

• Citigroup:
  • Forecasts copper prices could rise to $15,000 per tonne in a bullish scenario.
  • Drivers include:
    • Weak US dollar
    • Interest-rate cuts
    • Strong investor inflows
• JPMorgan:
• • • Expects the rally to extend into 2026.
    • Cites severe supply disruptions as the key reason.

• Goldman Sachs:
  • Expects copper prices to decline in 2026.
  • Points to a modest global supply surplus next year.
  • However, it believes long-term demand from:
    • Power grids
    • Electricity infrastructure will support prices beyond 2026.

OVERALL SIGNIFICANCE

• The copper rally reflects:
  • Geopolitical trade disruptions
  • Fragile global supply chains
  • Structural rise in demand from AI and clean energy
• Copper is emerging as a strategic metal for the future economy.
• Price volatility may continue due to policy uncertainty and supply risks.