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Copper prices have surged to a fresh record high, with experts attributing the rally to a combination of US tariff concerns, tightening availability, supply disruptions and rising demand from areas such as artificial intelligence (AI), electrification and power infrastructure.
Benchmark three-month copper on the London Metal Exchange (LME) climbed to an all-time high of USD 14,533 per tonne, surpassing its previous record of USD 14,527.50 set in January. Kishore Narne, Director and Head of Commodity at Motilal Oswal Financial Services, said copper was caught between persistent global supply disruptions and strong structural demand. Copper is caught in a tug-of-war between persistent global supply disruptions and driven by mine supply shortfalls in South America and refinery concentrate bottlenecks, Narne told ANI. He said structural electrification demand and tight spot availability provide strong downside support around the Rs 1,3601,370 per kg band. However, he expects a sustained upside breakout to remain capped near Rs 1,4001,410 per kg until there are monetary easing signals or fresh industrial demand catalysts. Ajay Bagga, Banking and Market Expert, told ANI that the immediate rally was closely linked to US tariff expectations, with manufacturers bringing forward purchases to avoid potentially higher costs later. This isn't copper going up because the world needs more copper right now it's copper going up because everyone's racing to buy it before Washington's tariffs make it more expensive later, Bagga said. He described the move as a trade-policy rally taking place on top of a structural supply shortage. Bagga said the ongoing Section 232 investigation into copper imports and market expectations of a 15 per cent tariff starting January 2027, rising to 30 per cent by 2028, have encouraged US manufacturers to buy copper ahead of possible tariffs. According to Bagga, this has resulted in record US imports, with more than 225,000 metric tons of refined copper imported into the US in July alone. He also pointed to the ageing global mine fleet, which is struggling to keep pace with demand from data centres, AI infrastructure, renewable energy and power grid expansion. Antu Eapen Thomas, Senior Research Analyst at Geojit Investments, said the rally was being driven by tighter market availability, with expectations of US import tariffs disrupting global trade flows. Copper's rally is being driven by tightening market availability as anticipation of US import tariffs has disrupted global trade flows, with significant volumes being redirected to the US and reducing inventories on the LME and elsewhere, Thomas told ANI. He said operational challenges at major mines were also limiting growth in supply, while steady demand from electrification, power infrastructure and data-centre investments was providing additional support to prices. Ajay Kedia, Director of Kedia Advisory, said the record LME price reflected tightening supply as well as rising demand from new technology and infrastructure sectors. Coppers record-breaking surge above USD 14,500 reflects tightening global supply, accelerating electrification and AI-led grid demand, reinforcing expectations for further fundamentally driven upside despite near-term technical overextension and volatility, Kedia told ANI. He said the rally was being supported by tightening mine supply, declining ore grades, falling available LME inventories, constrained concentrate availability and slow project development. At the same time, AI data centres, grid expansion, electric vehicles, renewable energy and defence investment are increasing copper consumption, Kedia said. He expects copper to remain firmly bullish for the rest of 2026, although he cautioned that prices could see short-term consolidation and higher volatility. In India, however, the rise in global copper prices has not translated into a similar move in domestic prices due to appreciation in the Indian rupee over the past 15 days. Kedia said MCX Copper remains around Rs 1,3871,388 per kg and has not broken above Rs 1,400, although the long-term outlook remains positive. Overall, the experts said the copper rally is being supported by both short-term trade-related buying and longer-term changes in supply and demand. With copper already at a record level, experts expect the long-term outlook to remain positive, although short-term consolidation and volatility cannot be ruled out. (ANI)
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