Copper prices on the London Metal Exchange climbed above $14,000 per ton on Wednesday, nearing the all-time high set in January, as a confluence of supply disruptions and surging demand from electrification and artificial intelligence sectors tightened the market. The metal, essential for power grids, electric vehicles, data centers, and clean-energy infrastructure, has rallied for eight consecutive sessions.
Record Highs in New York
Comex copper futures in New York hit a new record of $6.6455 per pound on Tuesday, while LME three-month copper reached $14,196.50 per ton, just shy of the January record of $14,527.50, according to Bloomberg data. The rally reflects a shift from speculative demand to actual supply constraints.
Supply Disruptions Mount
Freeport-McMoRan's Grasberg mine in Indonesia, the world's second-largest copper operation, remains a focal point. The company reiterated on Monday that full production is expected by end-2027, despite earlier confusion over a potential delay to 2028. Current output is at 40-50% capacity, with recovery hampered by mudflow-related logistics and ore-handling issues. Freeport told Reuters it would have issued a market alert if a further delay were imminent.
A shortage of sulfuric acid, a key input in copper processing, has added to the supply squeeze. The Wall Street Journal reports that shipping disruptions near the Strait of Hormuz and Chinese export curbs have made sulfuric acid more expensive and harder to source, raising the risk of output cuts at some smelters.
Chinese Refined Production Drops
China's refined copper production fell 3% in April to 1.05 million tonnes, with further declines expected in May due to scheduled smelter maintenance, according to Beijing Antaike Information Co. The drop comes as Chinese copper inventories dwindle and premiums rise, while exports of clean-energy goods—heavy copper users—picked up last month.
Demand Drivers Remain Strong
Demand from power grids, data centers, electric vehicles, and clean-energy equipment continues to support prices. Ajit Mishra, senior vice president of research at Religare Broking, told ETMarkets that global copper prices are underpinned by "supply concerns, electrification demand, AI/data-centre demand," and geopolitical disruptions, including the U.S.-Iran conflict that has squeezed sulfur and sulfuric acid exports from the Middle East.
Miner Response and Risks
Major miners are ramping up output, but supply is not keeping pace. Rio Tinto CEO Simon Trott said at Bank of America's metals conference that the company boosted copper production by 11% last year and targets another 13% increase by 2030. The Rio-BHP Resolution Copper project in Arizona recently cleared a key federal permitting hurdle, per The Wall Street Journal.
However, the rally faces risks. A normalization of shipping in the Middle East or Freeport meeting its 2027 Grasberg timeline could unwind gains. High oil prices and geopolitical tensions could also stall global growth and weigh on copper demand. The market remains tightly wound, with prices sensitive to any supply or demand shifts.
