The following is a guest editorial courtesy of Carolane de Palmas, Markets Analyst at Retail FX and CFDs broker ActivTrades.

While supply struggles, copper prices have surged to unprecedented levels. Futures on the London Metal Exchange jumped to more than $11,400 per tonne during Wednesday’s morning trading. This rally has pushed copper to new highs and up over 30% this year, marking its strongest annual performance since 2017. Is the copper story of 2025 and beyond simply about a commodity price rally? Is it rather about a fundamental shift in global industrial infrastructure, spurred by the concurrent trends of decarbonization and digitalization? Let’s take a closer look.

Glencore’s Production Reality Check Signals Deeper Industry Challenges

Glencore, one of the world’s major mining companies, slashed its 2026 production guidance to a midpoint of 840,000 tons—a significant reduction from the previously targeted 930,000 tons. This downward revision, announced at the company’s Capital Markets Day in London, represents more than just one company’s operational struggles; it’s a stark illustration of the mounting challenges facing global copper supply at precisely the moment when demand is accelerating.

The revised guidance places Glencore’s 2026 target at 810,000 to 870,000 tonnes (around 10% below previous guidance), primarily due to setbacks at the Collahuasi mine in Chile, which the company jointly operates with Anglo American. This marks the fourth consecutive year of declining output for Glencore, with current production sitting roughly 40% below 2018 levels—a fall that underscores the difficulty of maintaining copper output even for well-established operations.

The company’s struggles extend beyond operational hiccups. CEO Gary Nagle acknowledged that Glencore expects its base copper business to exceed one million tonnes annually by the end of 2028, but reaching this milestone will require successfully restarting the Alumbrera mine in Argentina’s Catamarca Province. After being shut down in 2018, the mine is expected to begin production in the first half of 2028. Alumbrera is expected to produce about 75,000 tonnes of copper over a period of four years once it is operational.

Yet even as Glencore charts an ambitious path to reach 1.6 million tonnes of annual production by 2035, the near-term reality paints a picture of persistent supply constraints. The mining giant has been forced to implement sweeping operational reviews, including cutting roughly 1,000 jobs and targeting $1 billion in recurring cost savings by year-end. These measures reflect broader industry pressures: declining ore grades, water restrictions, and complex regulatory environments that make ramping up production increasingly difficult and expensive.

Copper Record Prices Amid AI’s Insatiable Appetite for the Red Metal

What’s driving copper prices to new highs isn’t traditional construction or manufacturing demand—it’s rather the explosive growth of artificial intelligence infrastructure. The AI revolution has created an entirely new category of copper consumption. Hyperscale AI data centers are copper-intensive, requiring up to 50,000 tons compared to the 5,000–15,000 tons used by conventional data centers.

The shift in demand is staggering: modern AI-focused data centers need about 100 megawatts (MW) of power, marking a tenfold jump from the 5–10 MW typically consumed by traditional data centers. This escalation directly translates to copper demand, as the metal is essential for power distribution, cooling systems, and the extensive cabling that connects thousands of high-performance servers.

Industry projections suggest global data center copper demand will reach 400,000 tonnes annually by 2030, with peak consumption potentially hitting 572,000 tonnes in 2028. This represents an annual growth rate of 8 to 12% through the end of the decade—far outpacing traditional demand sectors, such as classic electrification trends.

What to Expect from Copper for 2026

The convergence of constrained supply and surging AI-driven demand has fundamentally altered the copper market’s trajectory. Major financial institutions are increasingly optimistic, with most revising their forecasts upward and expecting continued strength well past 2026.

J.P. Morgan Global Research expects copper prices to reach $12,500 per metric ton in the second quarter of 2026, averaging approximately $12,075 per metric ton for the full year. UBS has laid out an even more aggressive quarterly roadmap, forecasting prices climbing from $11,500 per tonne in March 2026 to $12,500 by September, with initial targets reaching $13,000 per tonne by December.

Why are these projections so bullish? Strong demand from electrification-related and AI-related sectors, market concentration and limited growth in mining are likely to keep pushing the copper market into a 150,000 deficit in 2026 from a previous surplus of 209,00 tons according to the International Copper Study Group (ICSG). The deficit could be a structural phenomenon, which is likely to support copper prices if demand keeps increasing. And with a projected 30% supply deficit by 2035 according to S&P Global, copper is emerging as a critical vulnerability in the global supply chains essential for the energy transition and the expansion of artificial intelligence.

The copper supply challenge is compounded by several issues: ongoing operational disruptions (like declining ore grades and water shortages) and community protests in major producing countries (Chile and Peru). Adding to this, the 17-to-23-year lead time for new mines prevents quick supply adjustments. Furthermore, key Chinese smelters have announced significant 2025 output cuts due to diminishing profitability.

The tariff landscape adds another layer of complexity. Uncertainty surrounding U.S. trade policy has created significant price dislocations between American and global markets. While President Trump initially spared commodity-grade copper from levies, the threat of future tariffs starting in 2027 has prompted massive front-loading of imports to the United States, effectively locking substantial inventory within U.S. borders and exacerbating shortages elsewhere.

“The President may determine whether imposing a phased universal import duty on refined copper of 15 percent starting on January 1, 2027, and 30 percent starting on January 1, 2028, as recommended by the June 30, 2025, report, is warranted to ensure that copper imports do not continue to threaten to impair the national security,” – the White House.

Bottom Line

Copper appears positioned for sustained price strength, but volatility will remain elevated. Any significant disruptions at major mines, shifts in Chinese economic policy, or breakthroughs in copper substitution could trigger sharp price movements in either direction.

The energy transition, electric vehicle adoption, grid modernization, and now AI infrastructure are converging to create what analysts describe as a perfect storm for copper demand. Yet the mining industry’s inability to quickly bring new supply online means this supply-demand imbalance will likely persist well into the next decade.

So the question doesn’t seem to be whether copper prices will remain elevated— but how high they’ll need to climb before supply and demand find a new equilibrium…

Sources: Wall Street Journal, Reuters, Yahoo Finance, Bloomberg, Mining, Glencore, Copper Development Association, International Energy Agency, J.P. Morgan, S&P Global, International Copper Study Group, White House

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