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| Copper Price |
Copper prices surged to a record high of $12,159.50 per tonne on the London Metal Exchange, marking the highest price ever seen for the industrial metal. This price spike comes after a year of mine outages, trade disruptions, and supply bottlenecks, setting copper on course for its biggest annual gain since 2009.
Tariffs and Supply Shortages Drive Price Surge
The sharp rise in copper prices has been driven by several key factors, including the looming possibility of U.S. tariffs on copper. U.S. imports of copper have surged, creating a competitive market where manufacturers worldwide are bidding for limited supplies. As a result, prices have climbed nearly 40% this year, despite weakening demand from China, which typically consumes about half of the world’s copper.
Brendan Smith, CEO of SiTration, commented that the price rally reflects both short-term disruptions and long-term structural challenges. He pointed out that, while the market may not be in a full-blown deficit, recent mine outages and the potential for tariffs have created a perfect storm for higher prices. The increased demand for copper from industries like artificial intelligence (AI) infrastructure and renewable energy projects only amplifies this pressure.
Structural Supply Challenges and Long-Term Outlook
Copper remains a critical material for the global economy, particularly for electrification, renewable energy, and data centers. However, the mining industry is struggling to meet the growing demand. Disruptions in major mining regions, including the Americas, Africa, and Asia, have limited production, while geopolitical risks and slow permitting processes are further exacerbating the problem.
In the longer term, copper demand is expected to soar, particularly tied to the energy transition. According to BloombergNEF's Transition Metals Outlook 2025, copper demand for energy-related applications could triple by 2045. Without substantial investments in new mining projects and recycling, copper deficits could reach 19 million tonnes by 2050. As a result, the market is facing significant structural strain, leading to an overall tightening of supply.
ScrapInsight Commentary
Copper prices are expected to remain volatile due to both short-term disruptions and long-term supply challenges. While demand from sectors like AI and renewable energy will continue to drive prices, the lack of new copper projects poses a significant risk to meeting future demand. Without significant investment in new mines and recycling infrastructure, the copper market may face severe deficits in the coming decades.
