Copper Hits Record High Above $11,100 on Acute Supply Fears
Persistent mine disruptions and strong demand from the energy transition are fueling a powerful rally in the industrial metal, lifting shares of major producers.
Copper prices surged to an all-time high on Tuesday, breaking above $11,100 per metric ton as deepening supply constraints and resilient global demand created a potent cocktail for a rally in the critical industrial metal.
The benchmark copper contract on the London Metal Exchange reached a record peak, driven by a tightening physical market that has traders scrambling to secure supplies. The move has provided a strong tailwind for major copper producers, with shares of Freeport-McMoRan (NYSE: FCX) rising 2.5% in afternoon trading, while Teck Resources (NYSE: TECK) gained over 1.7%.
The rally is underpinned by significant and persistent disruptions at key global mines. A central factor remains the ongoing shutdown of First Quantum Minerals' Cobre Panama mine, which accounted for roughly 1% of global copper supply before it was ordered to close late last year. Negotiations to reopen the mine have been complex, with Panama's government recently setting new ownership terms, leaving the timeline for a restart uncertain.
Compounding the issue are operational challenges elsewhere. Freeport-McMoRan, one of the world's largest copper miners, recently reported that a mud rush incident at its Grasberg mine in Indonesia curtailed its third-quarter production. Similarly, Teck Resources lowered its full-year copper production guidance due to operational issues at its Quebrada Blanca mine in Chile. These specific setbacks are magnifying a broader market deficit that analysts have been forecasting for months.
"The supply side of the copper equation is looking increasingly fragile," said a commodities strategist at a major investment bank. "We are seeing a convergence of large-scale outages and smaller operational issues that are collectively removing a significant amount of metal from the market at a critical time."
On the demand side, the narrative remains robust, largely driven by the global transition to green energy and strong consumption from China. Copper, often called "the metal of electrification," is a vital component in electric vehicles, wind turbines, solar panels, and grid infrastructure. China, which consumes more than half of the world's copper, continues to push forward with ambitious renewable energy projects. Analysts at Goldman Sachs have forecast Chinese copper demand to grow over 5% this year, absorbing available supply.
The price surge has allowed producers to offset their own operational headwinds. Freeport-McMoRan, with a market capitalization of over $59 billion, posted third-quarter earnings that beat analyst expectations, as higher realized copper prices compensated for the lower production volumes.
The outlook for the red metal appears set to remain tight. While Teck Resources is advancing a project to extend the life of its Highland Valley Copper mine into the 2040s, such large-scale projects take years to impact global supply. With inventories at historically low levels and demand tied to the long-term structural trend of decarbonization, market participants are bracing for continued price volatility and a potentially prolonged period of elevated prices.