Copper Price Nears $12,000 High on Supply Deficit and AI Demand
The industrial metal is surging toward record highs as soaring demand from data centers and EVs collides with a structural deficit in global mine supply.
Copper prices are charging toward all-time highs, with futures on the London Metal Exchange nearing $12,000 per metric ton, as a stark supply-demand imbalance grips the global market. The metal, a critical barometer for economic health, is being fueled by a potent combination of stagnant mine supply and accelerating demand from the artificial intelligence and electric vehicle sectors.
The demand side of the equation has been supercharged by the global push for electrification and the explosive growth of AI. Data centers, which power AI applications, require massive amounts of electricity and, consequently, copper wiring for power distribution. This new demand driver could add up to 400,000 metric tons of consumption annually. This comes on top of already robust demand from the electric vehicle market, renewable energy projects, and grid upgrades, which all consume significantly more copper than their fossil-fuel-based counterparts.
This demand surge is colliding with a constrained supply landscape. The market is facing what analysts at J.P. Morgan Global Research call a structural deficit, with a projected global shortfall of 330,000 tons. Decades of underinvestment in new mines, coupled with declining ore grades at existing projects and a lack of major discoveries, have made it difficult for producers to respond to the price signal. The lead time to develop a new copper mine can often stretch 15 to 20 years, suggesting that supply will remain tight for the foreseeable future.
The price action has provided a significant tailwind for the world's largest copper producers. Shares of Freeport-McMoRan (NYSE: FCX), a bellwether for the industry with a market capitalization of over $70 billion, rose 2.6% in recent trading to $49.15. The company has seen its quarterly earnings growth jump nearly 28% year-over-year, reflecting the favorable pricing environment. Wall Street remains bullish, with 17 analysts rating the stock a 'Buy' or 'Strong Buy' against only four hold or sell ratings.
Looking ahead, market consensus points toward a sustained period of high prices. J.P. Morgan forecasts that copper could average $12,075 per ton in 2026 as the deficit widens. Other institutions, including the World Bank, expect prices for industrial metals to firm through 2026 and 2027, potentially reaching new records as tightening supply meets modest demand growth.
As the world continues to electrify and digitize, copper's role as a mission-critical commodity is only set to grow. For mining companies, the current price boom offers a windfall, but it also intensifies the pressure to solve the industry's long-term supply challenges to meet the demands of a greening global economy.