Why copper prices hit record highs in 2026

Why are copper prices hitting record highs in 2026? Tightening global supply, refining bottlenecks, and rising geopolitical risks are creating a powerful structural squeeze that could keep copper prices elevated.

Why did copper prices (XCUSD) hit an all-time high on 13 May 2026? From my perspective, this rally is being driven by far more than short-term market momentum. Declining head grades at major mines, severe shortages of critical metallurgical inputs, and escalating geopolitical tensions in the Middle East are creating a structural supply squeeze, pushing copper prices higher and tightening global supply chains. 

At the same time, trade disruptions, refining bottlenecks, and rising production costs are amplifying pressure across the physical copper market. In this article, I break down how supply deficits, metallurgical constraints, and long-term demand trends could keep copper prices structurally elevated well beyond 2026.

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Global copper supply: Mining vs refining capacity

In 2025, global copper supply remained concentrated, with Chile dominating mining output while China controlled much of global refining capacity.

Upstream domination: Chile holds the world's largest copper reserves and remains the top producer. Other leading producers by annual mine output include the Democratic Republic of Congo (DRC), Peru, China, and Russia, while the US also ranks as a major global producer.

The refining bottleneck: While Chile and the DRC export the vast majority of their output as unrefined copper concentrate. China imports these raw materials to produce over 45% to 50% of refined copper. Consequently, although South American and African nations dominate upstream extraction capacity, global refined copper supply depends heavily on Chinese smelting and refining infrastructure.

(H2) Copper refining: Pyrometallurgy vs hydrometallurgy

Pyrometallurgy and hydrometallurgy shape copper refining output, while sulfuric acid shortages raise production costs and support higher copper prices.

• Pyrometallurgy (smelting/thermal refining): Operators apply this thermal process to higher-grade copper sulfide ores. Smelters capture sulfur dioxide (SO2), a key byproduct, to produce sulfuric acid, allowing facilities that utilize this method to maintain a self-sustaining acid supply loop.
• Hydrometallurgy (leaching/solvent extraction-electrowinning - SX-EW): Operators deploy this chemical process for lower-grade copper oxide ores. While the process requires significantly lower capital expenditure (CAPEX), it depends heavily on external merchant sulfuric acid to leach the ore.

The sulfuric acid crunch and the Strait of Hormuz blockade

Sulfuric acid is a vital input in hydrometallurgical refining. The closure of the Strait of Hormuz has stranded 50% of global seaborne sulfur exports in the Middle East. Combined with strict export bans on sulfuric acid, this blockade has triggered a severe supply shock to critical copper production inputs.

• Market share & geography: The SX-EW hydrometallurgical pathway accounts for approximately 16 to 20% of global refined copper capacity. Oxide mines, predominantly in the DRC, primarily use this pathway to extract copper from low-grade ores (under 0.5% Cu) or mine tailings that are uneconomical for pyrometallurgy. Tier-1 mining conglomerates, particularly Chinese firms like Zijin Mining, have aggressively expanded SX-EW operations in the DRC due to shallow, easily accessible oxide deposits. Major ultra-large-scale mines in Chile (e.g., Escondida and Gabriela Mistral) also rely on this method.
• Input vulnerability: Because major producers in Chile and the DRC rely heavily on imported sulfuric acid, the supply crunch forces operations to run at fractional utilization rates. Conversely, regions running integrated operations (combining pyro- and hydrometallurgy) can utilize internally generated acid from smelting to bypass merchant market volatility.
• The China ban & sulfur spikes: Global producers unable to find alternatives to the Chinese supply faced partial or total operational halts following Beijing’s sulfuric acid export ban, effective from 1 May 2026. Escalating geopolitical tensions in late March compounded this by trapping sulfur (a byproduct of the oil refining process that manufacturers use to produce sulfuric acid, accounting for roughly 50% of global seaborne supply) at Middle Eastern ports. Consequently, global sulfur prices have increased by 1.5x since the beginning of 2026. China's export ban further indicates tight domestic supplies, as Beijing prioritizes acid allocations for fertilizer production to ensure national food security.
• Margin compression & production cost escalation: Volatility in sulfuric acid prices directly impacts the cost curve of finished copper cathode from SX-EW operations. Given that the process consumes an average of 3.5 tonnes of acid per tonne of copper cathode recovered, the parabolic spike in sulfuric acid prices in early 2026, surging from approximately 330 USD/tonne to current levels of 750 USD/tonne in Chile, has driven acid costs to 22%–33% of total cash costs in Chile, and 25%-42% in the DRC.

US tariff risks and rising copper market pressure

Trade policy risks further distorting global physical flows. The imposition of a 15% tariff on US metal imports has triggered aggressive stockpiling by US industrial consumers, keeping the COMEX-to-LME spread elevated at around 500 USD/tonne.

While the US government granted refined copper (cathode) a temporary tariff exemption through 2025, the medium-term policy outlook remains highly uncertain. The US Department of Commerce is scheduled to release an updated report by 30 June 2026 for Presidential review regarding whether to impose a 15% tariff on refined copper starting 1 January  2027 (which might escalate to 30% by 2028). Anticipating this regulatory risk, importers are front-loading volumes into the US. This localized hoarding has drained liquidity from ex-US warehouses, maintaining a steep premium on COMEX over LME and exerting upward price pressure across global spot markets.

Copper supply deficits and declining ore quality

Beyond near-term geopolitical and trade catalysts, systemic supply destruction and deteriorating reserve grades anchor copper's long-term bullish thesis.

Why copper supply is structurally tightening

The most critical long-term supply constraint remains the secular decline in global copper head grades. In Chile and Peru, the world’s two largest producers, average ore grades have plummeted by roughly 40% since 1991, falling from ~1.5% to ~0.9% today.

To deliver the same volume of refined copper, miners must now extract and process exponentially larger volumes of material, driving up energy consumption, water usage, and baseline operational expenditures (OPEX). By 2035, analysts project average global head grades to drop below 0.7%, rendering many mature assets economically unviable unless copper prices remain structurally elevated. This supports Goldman Sachs' view that greenfield investment requires prices of 12,000 to 15,000 USD per tonne, given the sharply rising marginal cost of production.

The growing copper supply-demand gap

• Supply peak: Analysts project primary mine supply to peak at 27 million tonnes by 2030 before declining to 22 million tonnes by 2040. Goldman Sachs forecasts mine supply growth to average just 1.5% annually from 2025 to 2030, vastly underperforming demand growth. Under its Stated Policies Scenario (STEPS), the International Energy Agency (IEA) warns of a 30% supply deficit by 2035, which widens to 35%–40% under more aggressive net-zero climate models.
• Demand multipliers: S&P Global forecasts global copper demand to surge by 50% to 42 million tonnes by 2040. The IEA projects demand reaching 33 million tonnes by 2035 and 37 million tonnes by 2050. Secular growth drivers include electrical grid expansion and infrastructure (accounting for >60% of demand growth through 2030), electric vehicles (EVs), AI data centers (which analysts expect to drive data center power consumption from 5% to 14% of total US electricity demand by 2030), and expanding global defense expenditures.

By 2040, Goldman Sachs projects a structural deficit of approximately 10 million tonnes, a 25% shortfall relative to projected demand, presenting a systemic risk to global economic growth. UNCTAD estimates that bridging this gap will require up to 80 new greenfield mines and 250 billion USD in capital investment. With analysts expecting demand to outpace supply permanently from 2029 onward, the market is entering a structural multi-year secular bull market.

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Final thoughts: Copper market outlook

From my perspective, the recent rally in copper prices is being driven by more than temporary market volatility. Structural shifts in global supply-demand fundamentals, amplified by US tariff-related front-loading, precautionary hoarding, and refining bottlenecks, are creating a tighter physical copper market that continues to support elevated prices. In the near term, I believe the acute shortage of critical metallurgical inputs, particularly sulfuric acid, remains one of the most important catalysts because it is compressing margins and limiting refined copper output across key producing regions.

Meanwhile, a peace agreement between the US and Iran that eases short-term geopolitical tensions in the Middle East might depress copper prices sharply as unlocked sulfur supplies enter the market. Furthermore, this development may prompt China to reopen sulfuric acid exports, alleviating supply constraints. Recovering economic activity would boost manufacturing and consumer demand, supporting copper prices. Consequently, copper prices might hold above 10,000 - 14,000 USD/ton.

A prolonged closure of the Strait of Hormuz will significantly impact copper supply, keeping copper prices elevated. Conversely, any signs that the global economy might plunge into a recession—driven by soaring inflation that dampens consumer demand and manufacturing output—may exert the opposite effect on copper and other commodities. In the event of an economic crisis, prices might plummet to 7,000 - 8,000 USD/ton.

My main insights

• Watch sulfuric acid and refining input markets closely: Rising input costs can directly pressure copper supply and create upside volatility in XCUSD.
• Monitor geopolitical developments in the Middle East: Any disruption tied to the Strait of Hormuz could further tighten the sulfur and copper refining supply chain.
• Track US tariff policy, and COMEX-LME spreads: Changes in trade policy could continue distorting global copper flows and price premiums.
• Focus on structural supply trends, not just short-term price action: Declining ore grades and long-term supply deficits may keep copper prices structurally elevated even after temporary disruptions ease.

Disclaimer: The views and insights shared in this article reflect the author’s personal analysis and opinions and are intended for informational purposes only. They do not constitute financial, investment, or trading advice, and readers should conduct their own research or consult a qualified financial professional before making any trading decisions.

Frequently asked questions about copper prices

Which country has the largest copper reserves and production in the world?

Chile has the world's largest copper reserves and mine production, but China is the largest producer of refined copper, accounting for over 50% of the world's copper concentrate refining capacity.

What are the main copper refining methods?

There are two main copper refining methods. The first is hydrometallurgy (wet process), which accounts for about 16-20% of global capacity and is used to refine copper oxide ores. The other is pyrometallurgy, which makes up the vast majority and is used to refine sulfide ores.

Why are Middle East tensions affecting copper prices?

The Middle East accounts for about 50% of the world's seaborne sulfur exports, which are used to produce sulfuric acid, a critical component in copper refining. While the Strait of Hormuz remains closed, countries such as Chile and the DRC (Democratic Republic of the Congo), which use the wet process, will depend entirely on imported sulfuric acid.