Copper Prices Soar Amid U.S. Demand and Chilean Supply Constraints

Author: Xiaolan, Global Zero Carbon Research Center

Copper has gone completely crazy this year. Known as the "Doctor Copper" and the king of commodities, it has once again reached historical heights.

First, domestic spot copper prices broke 110,000 yuan, setting a new historical high. Now, on the evening of September 7, the London Metal Exchange (LME) copper futures price also surged past $14,533 per ton, breaking the previous high set in January this year.

After this surge, copper prices have set a new historical record on the London Metal Exchange. As of now, the year-to-date increase in LME copper futures has exceeded 17%, and the increase over the past 12 months has reached as high as 47%.

On September 8, the madness of copper prices continued, briefly touching a historical high of $14,616 per ton during trading. As of 4 PM Beijing time, LME copper futures prices remained around $14,600 per ton.

This record-breaking trend occurred against the backdrop of the U.S. exchanges being closed for Labor Day and overall market risk appetite being under pressure, highlighting the strong driving forces behind the rise in copper prices and reflecting the deep structural contradictions faced by this key industrial metal.

The long-term demand story for copper, driven by power grid construction, artificial intelligence, and data center development, has been told for a long time, but this time the direct trigger that pushed prices to new highs was the expectation of U.S. copper tariffs and the current global "copper rush".

Cristián Cifuentes, a senior analyst at the Chilean copper industry think tank Cesco, pointed out that this round of price movement is "more driven by metal transfers caused by tariffs rather than strong end-user demand," essentially reflecting "local shortages rather than a global demand surplus".

Meanwhile, Bradesco BBI analyst Rafael Barcellos stated that the global copper supply situation is deteriorating. He warned that extreme weather in Chile has forced Antofagasta and Lundin to lower their production guidance, further tightening an already pressured spot market.

Caption: LME copper futures prices hit a new high

Source: Investing

In the past, copper was a fundamental building material that entered the previous growth cycle driven by real estate and large infrastructure projects. This time, however, the deep engine driving the copper market into a super cycle is AI and new energy.

In particular, the development of artificial intelligence and the rapid construction of data centers have become significant driving forces for the current growth in copper demand. The demand for copper from AI goes far beyond the wires and cables within data centers; it also means new power generation facilities, transmission lines, substations, transformers, and broader grid upgrades.

High-performance servers used for AI training can consume 15 to 30 kilograms of copper each, which is 3 to 6 times that of ordinary servers. According to industry estimates, the copper consumption of a 1 GW computing power data center is 2.5 times that of traditional data centers. In 2026 alone, the global demand for copper from computing clusters is expected to increase by nearly 400,000 tons, and by 2030, this figure could soar to a million tons.

The long-term bullish outlook for copper demand is already a consensus, but recently, short-term factors have begun to dominate. In particular, hundreds of thousands of tons of copper have been shipped to the U.S. this year, as traders attempt to profit from higher copper prices in the U.S., primarily due to the sustained premium of Comex copper futures prices.

According to a report by Bloomberg on August 4, citing data from financial information service provider IHS Markit, approximately 200,000 tons of copper metal arrived in the U.S. in July, the largest single-month inflow since records began in 2014. If hidden inventories are included, the total domestic inventory in the U.S. is estimated to reach 1.4 to 1.5 million tons, setting a century record.

The market is still betting on the possibility of the U.S. imposing tariffs on refined copper. About two months have passed since the U.S. Department of Commerce was originally scheduled to submit a report to the White House on the necessity of tariffs, but the report has yet to be released, and the market continues to price in the possibility of tariffs on primary copper imports.

Caption: Hundreds of thousands of tons of copper have been shipped to the U.S.

Source: Bloomberg

In other words, a large amount of spot copper is being drawn away from the European and Asian markets, and LME copper inventories continue to decline. Global copper has not suddenly "disappeared"; instead, it has been hoarded in the U.S., causing spot markets in other regions to tighten, and copper prices to rise accordingly.

However, a bigger problem lies on the supply side, as global copper supply is experiencing a rare "multiple collapse". In 2026, global copper mines may see their first production decline in a decade.

In the first half of 2026, the combined production of 49 sample copper companies was 8.196 million tons, a year-on-year decline of 4.3%, a reduction of 371,000 tons; the year-on-year decline in the second quarter further expanded to 4.5%, and the supply contraction has not only failed to ease but has deepened. Meanwhile, the annual production guidance has been net revised down by 38,000 tons, with only 6 out of 35 samples increasing capital expenditure.

The combined copper production of these 49 sample copper companies accounts for 72.3% of global mine copper production. The significance of this sample coverage is that it is not a local phenomenon in a specific region but covers nearly three-quarters of the "mainstream players" in global mine copper supply—collectively reducing output means that the supply contraction is industry-wide.

To make matters worse, due to severe winter storms and disruptions in mining production, Chile, the world's largest copper producer, saw its copper exports drop to the lowest level in over a year in August. Heavy rains, snow, and strong winds in July and August disrupted mining production and caused ports to intermittently shut down. Chile's copper production difficulties are also providing strong support for global copper prices.

Data released by the Chilean central bank on Monday showed that copper export revenues in August were $4.62 billion, a 14% decrease from July and a 3.2% year-on-year decline, marking the lowest monthly level since July 2025.

It is noteworthy that the decline in export revenues occurred against the backdrop of significantly rising copper prices. The average price of copper in August this year was over 40% higher than the same period last year. In other words, although copper prices have surged, export revenues have instead declined, reflecting a more pronounced drop in Chile's actual copper export volume.

Caption: The global impact of the El Niño phenomenon

Source: FT

Another hidden line is sulfuric acid. Geopolitical conflicts in the Middle East have disrupted sulfur transport through the Strait of Hormuz, causing the cost of wet copper processing in the Democratic Republic of the Congo, which relies on sulfuric acid, to rise to about $7,000 per ton, a 47% increase from the end of last year. Overseas wet copper production capacity is facing widespread contraction. From mining to smelting to sulfuric acid, every link in the copper supply chain is sounding alarms simultaneously.

At the same time, extreme weather is further amplifying supply risks. For the copper mining areas in South America and Africa, which account for about half of global production, the heavy rains and floods brought by the super El Niño are threatening mining and logistics in Chile and Peru, while droughts are beginning to suppress hydropower supply in the Democratic Republic of the Congo and Zambia.

Antofagasta and Lundin Mining have respectively lowered their 2026 production guidance to 625,000 to 655,000 tons and 300,000 to 325,000 tons. According to data from the International Copper Study Group (ICSG), global copper mine production in the first half of 2026 decreased by 1.1% year-on-year, with a deeper decline of 2.6% in copper concentrate production, while industry giants Codelco and Freeport-McMoRan both experienced double-digit declines in production.

Morgan Stanley has also revised its previous production increase expectations down to flat or even slightly declining—this means that global copper mine annual production may see its first annual decline since 2017.

As the demand for new energy vehicles, high-voltage power grids, and AI data centers intertwines with the needs for computing power and electricity consumption, copper is evolving from a basic commodity into a strategic resource that controls the lifeblood of future energy and the digital economy.

In the short term, core observation variables include Chilean mining production, Democratic Republic of the Congo's export policies, U.S. tariff policies, and global inventory changes; in the medium to long term, the aging of global mines, the lengthy production cycles of new mines, combined with the continuous demand driven by AI computing power, power grids, and new energy, are likely to maintain a tight balance between copper supply and demand.

This content is provided for general informational purposes only and doesn't constitute financial, investment, legal, or tax advice. Any events, rewards, online promotions, or related information mentioned herein should not be considered a recommendation, solicitation, or invitation to purchase, sell, trade, or otherwise deal in any crypto assets. Crypto assets are highly volatile and may result in loss. The availability of WEEX services, products, and related events may vary by region. You are responsible for ensuring that your participation is in accordance with applicable local laws and regulations.