Why in news?
In December 2025 copper futures on the London Metal Exchange surpassed US$12,000 per tonne, a historic high. Prices have risen more than 35 % since the start of 2025 and analysts warn that tight supplies and booming demand could keep the market elevated into 2026.
Background
Copper—sometimes called “Dr Copper” because its price is seen as a barometer of global economic health—is vital for modern life. Its excellent electrical conductivity makes it indispensable for power grids, electronic devices, electric vehicles and renewable‑energy systems. The red metal is also used in construction, plumbing and industrial machinery.
Why are prices so high?
- Supply disruptions: Accidents and maintenance at big mines in Indonesia, Chile and the Democratic Republic of Congo have cut production. Output cuts announced by companies like Glencore have tightened the market.
- Trade tensions: U.S. plans to impose tariffs on semi‑finished copper products in 2026 prompted traders to stockpile metal on American exchanges, creating a gap between U.S. and London prices. As shipments flowed to the U.S., global supply available elsewhere shrank.
- Demand from AI and electrification: Hyperscale data centres powering artificial‑intelligence models consume thousands of tonnes of copper for wiring and cooling. The energy transition—electric vehicles, wind turbines and solar farms—also requires vast amounts of copper.
- Financial speculation: Investors seeking exposure to the AI boom have piled into copper‑backed exchange‑traded funds. Canada’s physically backed copper ETF has gained nearly 46 % in 2025.
Outlook
Analysts surveyed by Reuters expect the copper market to remain in deficit—around 124 thousand tonnes in 2025 and 150 thousand tonnes in 2026. Despite weak demand in China, strong consumption elsewhere and persistent supply constraints could maintain upward pressure on prices. Long‑term, the energy transition may triple copper demand by 2045, creating incentives for new mining and recycling projects.
Source: The Indian Express
