--- title: "\"Dr. Copper\" takes off! Supply crisis brings super market, London copper hits all-time high" type: "News" locale: "en" url: "https://longbridge.com/en/news/268035301.md" description: "Copper prices have risen to a historic high due to concerns over supply shortages, with the London Metal Exchange copper price reaching USD 11,294.5 per ton. The potential for the United States to impose import tariffs could lead to a flow of global copper resources to the U.S., exacerbating supply tightness in other regions. Disruptions in copper production in Indonesia and Chile further intensify the supply shortage. JP Morgan expects that mine supply growth will only be 1.4% by 2026" datetime: "2025-12-01T08:17:02.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/268035301.md) - [en](https://longbridge.com/en/news/268035301.md) - [zh-HK](https://longbridge.com/zh-HK/news/268035301.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/268035301.md) | [繁體中文](https://longbridge.com/zh-HK/news/268035301.md) # "Dr. Copper" takes off! Supply crisis brings super market, London copper hits all-time high According to Zhitong Finance APP, due to concerns about a potential supply shortage in the global market, copper prices on the London Metal Exchange (LME) have surged to a historic high. The market is worried that the U.S. may impose additional import tariffs, prompting various parties to rush to ship copper to the U.S., which seems to exacerbate supply shortages in other regions as miners struggle to meet demand. On Monday, LME copper prices rose by 0.9% at one point, reaching USD 11,294.5 per ton, while futures prices on the New York Mercantile Exchange (Comex) soared by 1.6%. Prices for other metals also increased, with aluminum prices rising by 0.5%. Currently, copper prices are benefiting from a series of rare supportive factors: supply bottlenecks, a weakening dollar, and structural demand driven by energy transition and data centers. These latest trades continue the turbulent pattern in the copper market this year: at the beginning of the year, U.S. President Trump first threatened to impose tariffs, causing U.S. copper prices to soar and triggering a flow of global copper resources toward the U.S. Although Trump ultimately exempted refined copper from tariffs, he indicated that he would reassess this decision in the second half of 2026. Subsequently, a series of production disruptions at mines led to tightening supplies, pushing global copper prices to historic highs. ![b1231223bd80625fe44239f3a1a4f588.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251201/1764574649368869.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) ## Multiple Factors Pressuring Supply: Copper Mine Shutdowns, U.S. Tariffs Causing Global Inventory "Extreme Mismatch," Supply Premium Rising Due to severe supply disruptions, the copper market is experiencing significant tightness, leading to soaring prices. In September, a fatal landslide occurred at the Grasberg copper mine in Indonesia (the world's second-largest copper mine), triggering force majeure clauses; the mine's Grassberg Block Cave (which accounted for 70% of previously forecasted output) is expected to remain closed until the second quarter of 2026. Additionally, the production outlook for the Chuquicamata copper mine in Chile has been downgraded due to operational challenges, further exacerbating the global copper shortage. Gregory Shearer, head of base and precious metals strategy at JP Morgan, stated, "As we expect mine supply growth to remain flat this year, we have lowered our forecast for mine supply growth in 2026 to just about +1.4%, which is approximately 500,000 tons lower than our forecast at the beginning of the year." It is noteworthy that this supply tightness coincides with a mismatch in copper inventories. Traders are once again rushing to ship metal to the U.S., as it is anticipated that Trump will impose import tariffs next year, and U.S. prices remain higher than those on the London Metal Exchange. **Kostas Bintas, head of metals at Mercuria, stated that more than 500,000 tons of metal could arrive in the U.S. by the first quarter of 2026.** Earlier this year, the U.S. imported a large amount of copper in advance, so it currently has ample copper reserves. However, given that refined copper may ultimately be subject to tariffs under Section 232, U.S. copper prices continue to be higher than LME copper prices. **This open arbitrage not only temporarily locks in excess inventory in the U.S. but also helps attract additional copper imports to the U.S.** Snowdon stated that by the first quarter of 2026, the United States may hold 90% of the world's copper inventory.\*\* Deutsche Bank analysis pointed out that the global copper market is facing a supply squeeze. Due to severe supply disruptions and accelerated industry consolidation, mine supply is expected to decline in 2025 and rebound by only about 1% the following year, putting the market in a "clear deficit state." **![442d4eef816abd53f9e1024016c0f0a6.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251201/1764574608937716.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg)** Recently, at an industry conference held in Shanghai last week, **miners and smelters engaged in intense negotiations over processing fees, with miners pressuring smelters to accept record low processing fee benchmarks, while the annual premium for refined copper shipped to China surged to an all-time high.** Reports indicate that the intensity of price negotiations is unusually high. Executives from German copper smelter Aurubis AG expressed readiness to reject excessively low annual processing fee benchmarks and voiced dissatisfaction with "negative processing fees"—where smelters effectively pay miners to process raw materials. Major metal industry associations in China also oppose "unsustainable" negative processing fees. For most of this year, spot processing fees, typically serving as annual contract guidance, have remained in negative territory. Analysis indicates that the impact of this game is spreading globally. **As the U.S. attracts a large amount of refined copper due to tariff expectations, suppliers such as the world's largest copper producer, Codelco, have offered some Chinese customers a record premium of $350 per ton, far exceeding the agreed $89 this year. Codelco's quotes are often seen as industry benchmarks, and this aggressive pricing strategy reflects market concerns about supply chain distribution, as the shipping surge targeting the U.S. market may crowd out supply shares in other regions.** ## Weaker Dollar Boosts Copper Prices This year, expectations of interest rate cuts by the Federal Reserve, along with other central banks already lowering rates, have put pressure on the dollar. Additionally, early 2025 tariff measures have raised concerns about a slowdown in U.S. economic growth, undermining investor confidence. Moreover, the U.S. government's increasing fiscal deficit and rising interest costs have led to a decline in investor confidence. Some foreign investors, after experiencing a period of dollar strength, may shift their assets. Notably, geopolitical factors have prompted some countries to trade in their own currencies or alternative currencies, with "de-dollarization" transactions heating up in the past two years. In 2025, the dollar depreciated against major currencies, especially in the first half of the year, before stabilizing. ![0043d7761ac9df5be9f296adda038b5d.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251201/1764574068859097.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) According to recent news, **in the broader market, the dollar has weakened due to speculation that the Federal Reserve will ease policy again next month. This movement of the dollar occurred after a pro-rate cut official became a potential next governor of the central bank, making it cheaper for overseas buyers to purchase raw materials.** Since copper is priced in dollars on the international market, a depreciation of the dollar reduces the cost for foreign buyers using other currencies to purchase copper. This increases demand and drives up copper prices. Moreover, a weaker dollar can encourage investment funds to flow into hard assets such as commodities (including copper), as investors seek to hedge against currency depreciation and inflation risks. ## The AI boom brings strong demand, raising the copper price center In terms of demand, copper remains a core component of decarbonization. Electric vehicles, charging infrastructure, renewable energy generation, especially grid expansion, are seen as long-term development trends with high demand for copper. Additionally, the rapid expansion of artificial intelligence data centers is also driving copper demand: increased server capacity means more power connections, transformers, and cooling systems, which in turn require more copper for wiring, cables, and components. **UBS expects global copper demand to grow by 2.8% in 2025 and 2026, respectively.** Factors driving this growth include the popularity of electric vehicles, investments in renewable energy, grid expansion, and the booming data center industry. Electric vehicles, high-voltage transmission lines, wind and solar power plants, and data infrastructure all require large amounts of copper, making copper a key industrial material for decarbonization. This year, bolstered by the AI boom, many investors have remained optimistic about copper. The LME copper price has risen nearly 30% this year, with Comex copper prices reaching their highest level since July 30 on Monday. Analysts point out that global copper demand is expected to grow significantly in the coming decades, primarily driven by energy transition, the rapid expansion of artificial intelligence data centers, and the industrialization of emerging economies. This growing demand is expected to far exceed supply, potentially leading to shortages and price volatility. ![4667ab9957940fdd17af8d72919f8974.png](https://imageproxy.pbkrs.com/https://img.zhitongcaijing.com/image/20251201/1764574592131591.png?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg) Morgan Stanley points out that the growing demand from data centers presents an upside potential for copper prices. The firm notes that even though the overall demand base for the entire industry is relatively small, the sustained surge in computing power demand remains an extremely important issue for the copper market; this could mean that by 2026, the copper demand from data center installations will reach approximately 475,000 tons, an increase of about 110,000 tons from this year. Given these supply and demand dynamics, Morgan Stanley predicts a global refined copper deficit of about 330,000 tons by 2026, which will tighten market supply further. **Looking ahead, Morgan Stanley expects copper prices to reach $12,500 per ton in the second quarter of 2026, with an average price of about $12,075 per ton for the year.** \*\* At the same time, UBS raised its copper price forecast for March 2026 to USD 11,500 per ton, and increased its forecasts for June and September 2026 to USD 12,000 and USD 12,500 per ton, respectively. In addition, UBS set a new target price of USD 13,000 per ton for December 2026. Meanwhile, UBS significantly raised its expected supply gap: the gap for 2025 is approximately 230,000 tons, rather than the previously forecasted 53,000 tons; the gap for 2026 is approximately 407,000 tons ### Related Stocks - [JPMorgan Chase & Co. (JPM.US)](https://longbridge.com/en/quote/JPM.US.md) ## Related News & Research - [Tinci Materials' Hong Kong IPO Likely To Raise Over $1B](https://longbridge.com/en/news/280992312.md) - [Beazer Homes USA, Inc. $BZH Shares Acquired by JPMorgan Chase & Co.](https://longbridge.com/en/news/281493108.md) - [BUZZ-Copper miners gain as red metal touches two-week high](https://longbridge.com/en/news/281355807.md) - [Where is the economy headed? Copper offers a clue.](https://longbridge.com/en/news/281663762.md) - [METALS-Copper dips as oil rallies after Trump flags more Iran attacks](https://longbridge.com/en/news/281454100.md)