Minmetals Securities has released a research report indicating that copper prices have continued to climb and set new historical records in 2026, with persistent tightening on the supply side being the core driver behind this rally. On the policy front, expectations of US tariffs have created arbitrage opportunities, and the resulting suction effect has further pushed copper prices higher. Over the medium to long term, the AI sector does hold potential to emerge as a structural source of incremental copper demand, but in the short term, actual copper consumption in AI applications remains minimal, accounting for less than 3%.
Copper prices are currently trading in a historically high range. Copper prices have continued to surge in 2026, setting new records. Three-month copper futures on the London Metal Exchange (LME) hit an all-time high of $14,527 per metric ton on January 29. Looking at the year as a whole, prices have strengthened again recently. In the international market, LME copper futures broke through the $14,000 mark in August, with the three-month settlement price reaching $14,260 per ton on August 6, up nearly 14% year-to-date and approaching the historical peak set in January. In the domestic market, the main SHFE copper contract touched a high of 108,450 yuan per ton intraday on August 12, close to the year's peak seen in May.
Persistent supply tightening is the core factor driving this round of copper price gains. On the existing supply front, production disruptions and declining ore grades have caused output from major copper producers to fall short of expectations, providing support for elevated prices. The International Copper Study Group (ICSG) has revised its 2026 global copper mine production growth forecast down from 2.3% to 1.6%, corresponding to output of approximately 23.56 million tons. On the incremental supply front, delays have also emerged in restarts and new mine commissioning due to geopolitical factors and regulatory approvals. Notably, the impact of external disruptions such as extreme weather, geological risks, and policy bans on supply is on the rise. As a barometer of supply and demand, copper concentrate processing charges fell to -$174 per dry metric ton in August, the lowest level since 2021.
US tariff expectations have created arbitrage space on the policy front, with a suction effect lifting copper prices. After the US initiated a Section 232 investigation into copper products in February 2025, market expectations began to build around potential tariffs on refined copper. This expectation directly pushed COMEX copper prices higher, keeping them persistently above LME prices. Subsequently, the price differential drove global copper resources to flow into the United States. Driven by solid arbitrage profits, global traders concentrated on shipping refined copper to the US. By early August, COMEX copper inventories had climbed to over 650,000 tons, a surge of approximately 665% from the 80,000-90,000 tons recorded when the investigation was launched in February 2025, marking a century-high for the exchange.
On the demand side, AI's impact on copper prices is more reflected in the value revaluation and expectation premium brought by its strategic positioning as the "new oil of the AI era," while its pull on actual consumption is still in its early stages. The physical properties of copper, cost economics, and the existing technology ecosystem collectively determine its structural advantage in AI applications. In the medium to long term, the AI sector does hold potential to become a structural source of incremental demand, with the compound annual growth rate of global copper consumption from new computing power expected to reach 21% between 2025 and 2030. However, in the short term, copper's actual usage in AI remains small at less than 3%, and its real consumption scale is not yet sufficient to significantly impact the copper market's supply-demand balance. Currently, its influence weight is far lower than that of supply-side and policy-side factors.
Improved macro sentiment for industrial metals has boosted the sector, with metal prices trending stronger with fluctuations in July. Key focus areas include copper, tin, and nickel. For copper, deepening mine supply tightness, historically low treatment charges, and low domestic inventories point to prices trending higher with fluctuations. For tin, triple supply disruptions in Myanmar, Indonesia, and the Democratic Republic of Congo persist, with low inventories supporting high price levels, although off-season demand limits upside. For nickel, diverging inventory trends between refined nickel at home and abroad, coupled with policy tightening and rising costs in Indonesia providing bottom support, while weak downstream consumption caps upside, results in wide-ranging fluctuations.
Other metals with rigid supply dominance are expected to see upward shifts in strategic minor metal price centers, with key focus on tungsten and molybdenum. For tungsten, solid price support intentions at the mine end but sluggish restocking during the downstream consumption off-season have led to prices first falling then stabilizing, with month-end standoffs. Demand from cemented carbide and high-end manufacturing sectors, along with high overseas premiums, is building momentum for higher price centers going forward. For molybdenum, mining capacity near limits and weak import supplements resonate with steady demand uptake from special steel and new energy sectors, with a tight supply-demand balance supporting sustained stronger price performance.
Risk warnings: 1. Risks of changes in US copper tariff policies; 2. Risks of supply-side releases exceeding expectations; 3. Risks of fluctuating geopolitical conflict intensity; 4. Risks of AI data center construction falling short of expectations.
Comments