Copper Prices Extend Last Year’s Gains as S&P Warns of Global Supply Deficit

Copper prices rose 2 percent on Jan. 9, extending last year’s gains as S&P Global warned the industry faces a widening supply deficit over the next decade.

On the New York Mercantile Exchange, copper futures added $0.108, or almost 2 percent, to $5.91 per pound. Over the past 12 months, the red metal has soared 34 percent.

Earlier in the week, copper prices broke a record high overseas, surpassing $13,000 per metric ton on the London Metals Exchange.

S&P Global, writing in a report titled “Copper in the Age of AI,” said on Jan. 8 that demand for copper is projected to rocket to 42 million metric tons by 2040, reflecting a 50 percent increase from 2025.

Sectors concentrated in artificial intelligence (AI), defense, energy, and robotics are expected to be the main drivers of demand growth, particularly in China and the Asia-Pacific region.

Energy alone, the report authors say, will require an extra 7.1 million metric tons of copper annually between now and 2040.

“Here, in short, is the quandary: copper is the great enabler of electrification, but the accelerating pace of electrification is an increasing challenge for copper,” Daniel Yergin, vice chairman of S&P Global, who co-chaired the study, said in a statement.

“Economic demand, grid expansion, renewable generation, AI computation, digital industries, electric vehicles, and defense are scaling all at once—and supply is not on track to keep pace.

“At stake is whether copper remains an enabler of progress or becomes a bottleneck to growth and innovation.”

In recent years, several nations have identified copper as a critical mineral.

Late last year, the U.S. federal government added copper to its list of critical minerals, deeming it vital to the nation’s economic and national security.

Preventing a global copper squeeze will depend on developing new mines and expanding existing infrastructure. However, this will not be an easy task, said Eleonor Kramarz, global head of critical minerals and energy transition consulting at S&P Global Energy.

The copper industry is wrestling with a broad array of obstacles—both on the surface and underground, including deteriorating ore quality and rising input costs (labor and materials). Additionally, miners often endure environmental pushback and mounting legal reviews.

In total, S&P estimates a newly discovered copper deposit can take as long as 17 years to become an operating mine.

“Primary production—mining—remains the irreplaceable foundation of copper supply,” Kramarz said.

“Bridging the impending supply gap depends not only on geology, engineering, logistics, and investment, but also on governance and policies.

“That translates into timeliness in permitting and consultation, a time clock on litigation, and stability in governance and regulation. The alternative is uncertainty, and uncertainty comes at a hefty cost.”

Short-Term Factors

While copper prices face a plethora of long-term tailwinds, market analysts say there are short-term risks.

President Donald Trump imposed a universal 50 percent tariff on semi-finished copper products and copper-intensive manufactured goods, such as cables, fittings, pipes, and wires. But the final proclamation omitted raw and refined copper inputs.

The concern in the metals market is that Trump could raise import duties on refined copper after the Commerce Department’s review later this year. This fear has accelerated inflows to the United States, reducing international inventories. If the current administration refrains from adding tariffs on red metal, global stockpiles could reverse, which may push copper prices lower.

“A rush to ship copper into the US ahead of potential tariffs is draining supply elsewhere, leaving a hole in the global market and pushing prices higher—on top of an already constructive backdrop of strong demand and limited supply growth,” Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said in a note emailed to The Epoch Times.

A labor disruption in Chile could add to growing worries about worldwide supply, say ING commodity strategists.

“The start of a strike at the Mantoverde mine in Chile has added to concerns about copper supply. Low inventories across major exchanges leave little room to absorb further supply shocks,” they wrote in a Jan. 6 note.

The Mantoverde mine accounts for approximately 0.5 percent of global mined copper.

For now, tariff risks and tighter supplies will keep global prices elevated in the near term.

Other metal commodities are finishing the trading week in the green.

Gold prices rose more than 1 percent to $4,507 per ounce as at 10:14 a.m. EST, while silver increased 5.5 percent to firmly above $79 per ounce. Platinum advanced nearly 2 percent to $2,300.00 an ounce, and palladium prices spiked 6 percent to around $1,900 per ounce.