Copper’s Rally Isn’t Done — Supply Is Too Tight, Demand Too Strong
Copper moved higher again on Wednesday, pushing back toward record levels as the market faces a structural squeeze: global mines simply aren’t keeping up with demand.
This comes despite softer Chinese manufacturing data — including a 38-month streak of falling producer prices. Yet the long-term picture still favors copper:
- Clean energy buildouts
- Electric vehicle adoption
- AI-driven hyperscale data center construction
All three require massive amounts of copper per unit of growth. Even a modest acceleration in these sectors widens the supply gap.
Copper has already risen more than 30% this year on the London Metals Exchange, and several supply disruptions have kept inventories tight. Traders also expect a wave of US imports ahead of potential tariff changes, adding even more pressure.
Analysts: Higher Prices May Be Necessary
RBC Capital Markets summed up the market sentiment bluntly:
“A period of higher prices is needed to spur investment in new copper production.”
Large-scale copper projects take 10–15+ years to permit, build, and scale — a timeline completely out of sync with the explosive demand from data centers and electrification.
This mismatch is at the heart of the current rally.
Macro Tailwinds: Fed Cuts & Growth Outlook
The metal briefly dipped earlier in the week as markets positioned ahead of the Federal Reserve’s rate decision. A quarter-point cut is overwhelmingly expected, with attention now turning to how Chair Powell guides expectations for 2026.
Lower rates typically boost industrial metals by:
- Weakening the US dollar
- Improving credit conditions
- Supporting broader economic growth
Copper responded accordingly — closing up 0.6% at $11,556.50/ton.
Other LME metals were mixed: aluminum gained, while zinc slipped.
WSA Take
Copper continues to prove one thing: structural shortages don’t wait for perfect macro conditions.
EVs, renewable energy builds, and the AI supercycle are accelerating faster than miners can respond — and that imbalance is now showing up in price action.
Even with China’s softness, the demand story isn’t weakening. If anything, the power and data demands of AI are pulling forward future copper consumption.
For investors, the setup remains the same:
- Tight supply ✔️
- Long lead times ✔️
- Massive secular demand ✔️
This rally has fundamental legs — and unless new production comes online faster than expected, copper’s path of least resistance still points upward.
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