Copper has quietly become one of the most talked about commodities of 2026. Prices on the Comex touched nearly $6.7 per pound this month, up close to 48% from a year ago. Back home, MCX copper has been trading close to its own record levels. This is not a routine commodity cycle. Two separate shortages, a mine supply shortage and a smelting shortage are colliding at the same time that demand from AI data centers is scaling up faster than anyone expected.
None of this stays confined to trading screens. Copper runs through wiring, power cables, EV motors, construction, and now the servers that power artificial intelligence. A sustained copper price rally in 2026 touches costs across most of the economy and it is worth understanding what’s driving it.
What Is Pushing Copper Prices Up Right Now
A mix of trade policy and physical market stress is behind the current move.
Section 232 tariffs (United States):
- First imposed in August 2025 with a 50% tariff on certain copper imports
- Revised in April 2026, applying duties to the full customs value of covered products rather than just the metal content
- Adjusted again in June 2026, with targeted relief for select industrial equipment
- A Commerce Department decision on refined copper tariffs was due by June 30, 2026 and remains a key swing factor for global trade flows
Stockpiling and exchange dynamics:
- Tariff-driven trade pulled large volumes of copper into US warehouses ahead of the deadline, with Comex inventories climbing from roughly 453,000 tonnes to about 650,000 tonnes over the year
- This created a wide premium between Comex and London Metal Exchange (LME) prices, encouraging traders to redirect shipments toward the US
- LME backwardation curves have steepened through this period, a signal that buyers are willing to pay more for copper available now than for copper delivered later, which usually points to genuine physical tightness rather than pure speculation
Supply Side: A Market Already Stretched Thin
The supply story has two distinct layers this year: mines struggling to produce copper, and smelters struggling to process it.
Mine disruptions
Three major accidents hit copper mining in a single year:
- Kakula mine, DRC (May 2025): Ivanhoe Mines’ operation was hit by seismic activity and flooding, with pumping efforts still underway at the most affected sections
- El Teniente, Chile (July 2025): A tunnel collapse at Codelco’s flagship mine, which produces roughly 400,000 tonnes of copper annually, killed several workers and forced a complete halt of underground operations. The Caletones smelter was placed on care and maintenance after exhausting stockpiled ore
- Grasberg, Indonesia (September 2025): The world’s second-largest copper mine suffered a serious accident, prompting Freeport-McMoRan to declare force majeure. Analysts estimate close to 600,000 tonnes of lost output through the end of 2026, with full recovery not expected before 2027
Add to this Codelco’s financial strain, with rising production costs and a reported $24 billion debt load, along with ongoing operational troubles at Chile’s Quebrada Blanca mine, and it becomes clear why mine supply has struggled to keep pace with demand.
The smelting bottleneck
A less visible but equally important squeeze is happening at the smelting stage, where raw ore and concentrate get processed into usable copper metal.
- China added roughly four times more smelting capacity than global concentrate supply growth over the past three years
- This left too many smelters competing for too little raw material, pushing spot treatment charges into negative territory, at around minus $70 per tonne, meaning smelters are effectively paying extra just to secure feedstock
- Indonesia’s new Manyar smelter, built to run at 480,000 tonnes per year of capacity was meant to be fed by Grasberg concentrate. Its ramp-up is now in doubt
- The Iran-US conflict disrupted shipping through the Strait of Hormuz, worsening sulfuric acid shortages for South American refiners. China’s own suspension of sulfuric acid exports added further pressure
Longer term, the outlook stays tight. S&P Global projects a cumulative concentrate deficit of nearly 3 million tonnes by 2036, while the International Energy Agency projects a 30% supply shortfall by 2035.
Demand Side: AI Data Centers as the New Demand Driver
Traditional copper demand drivers, construction, power grids, and consumer electronics, remain steady. What has changed the conversation entirely is AI infrastructure.
- A conventional data center uses between 5,000 and 15,000 tonnes of copper
- A hyperscale AI facility can require up to 50,000 tonnes
- By 2030, data centers globally are projected to consume between 330,000 and 1.1 million tonnes of copper annually, close to 3% of total global demand
- US data center capital spending reached a seasonally adjusted $41.4 billion through August 2026, up 26% from a year earlier, though the pace of that increase has eased since June
- China plans to compete aggressively in AI infrastructure buildout, which would add to its own copper draw at a time when its property sector, traditionally the country’s biggest copper consumer, continues to contract
Beyond AI, electric vehicles, grid modernization, renewable energy installations and defense spending continue to add to structural demand. One flexible lever on the supply side is scrap copper. Higher prices are pulling more scrap into the market, which is part of why some banks have been able to revise their surplus and deficit forecasts.
How the Market Is Reading It
Forecasts across major banks show just how unresolved the picture still is:
- Goldman Sachs projects a base-case average of $5.17 per pound for 2026
- JPMorgan expects copper to reach roughly $12,500 per tonne by Q2 2026
- UBS projects around $13,000 per tonne by year-end 2026
The spread between these estimates reflects how many variables remain in motion at once: the final tariff decision, the pace of China’s demand, and how quickly disrupted mines come back online.
The India Angle
India’s own copper story is one of rising demand meeting limited domestic supply.
- India’s copper demand reached 1,878 kilotonnes in FY25, up 9.3% year on year, driven by infrastructure, construction, renewable energy and consumer durables
- Domestic consumption may grow 10-12% annually over the next two years
- Domestic refined copper production capacity from major producers stands at roughly 1.2 million tonnes, against consumption of about 1.7 million tonnes, leaving a structural import gap
Key domestic players are working to close this gap:
- Hindalco Industries, through Birla Copper, remains India’s largest custom copper producer and aims to sell 1 million tonnes of refined copper by FY30
- Hindustan Copper, the country’s only vertically integrated copper producer, has approved a new 3.0 million tonnes per annum concentrate plant at its Malanjkhand project
- Adani’s Kutch Copper has been ramping up production, though still below installed capacity
- Vedanta’s Sterlite Tuticorin plant, shut since 2018, remains a potential restart candidate that could meaningfully change India’s import dependence
Hindalco and Hindustan Copper have also signed an agreement under which Hindalco will source a large share of its copper concentrate domestically, a step toward reducing India’s reliance on imported raw material. TejiFactor covered the broader supply shock and its impact on India in detail in The Global Copper Crisis 2026, which is worth a read alongside this update.
Even with these capacity additions, one industry estimate puts India’s copper demand at up to 10 million tonnes by 2047, a figure that far outpaces current supply additions. Structural import dependence is likely to remain a reality for at least another decade.
Conclusion
Copper’s 2026 story comes down to two shortages arriving together. Mines are producing less than expected because of accidents and declining ore grades, while smelters are competing for too little concentrate because Chinese capacity has expanded faster than global mine supply. Layered on top of this is a genuinely new source of demand from AI infrastructure, alongside steady growth from EVs, grids and renewable energy.
For India specifically, this plays out against a backdrop of rising domestic demand and continuing reliance on imports, even as producers like Hindalco and Hindustan Copper work to build out local capacity. Readers who want a broader sense of how commodity cycles connect to Indian equity themes can explore TejiFactor’s Themes section for more context.
Watch three things going forward: the final Section 232 decision on refined copper, the pace at which Grasberg and El Teniente return to normal output and whether China’s AI buildout adds meaningfully to its copper consumption just as its property sector continues to slow.
Investments in securities are subject to market risks. This article is for informational purposes only and does not constitute investment advice. Please read all related documents carefully and consult a registered financial advisor before making investment decisions.