Copper has spent most of 2026 doing something it had not done in a quarter century: setting fresh records every few weeks. The COMEX contract printed an intraday all-time high of $6.71 per pound on May 13, and the May monthly close looks set to land at the top of the historical chart. In London, copper traded above $14,000 per tonne in mid-May, touching $14,196.50, within reach of the LME's January 29 record of $14,527.50.
Three forces have converged on the copper market over the past twelve months: AI infrastructure demand, an acute supply incident at Grasberg, and the introduction of US Section 232 tariffs. The sections below cover each in turn.
AI Is the New Demand Accelerant
The newest leg of the bull case is also the most concentrated. Per Bloomberg Intelligence, AI-ready data centers consume between 27 and 33 tonnes of copper per megawatt of applied power, and North American build-out alone could add 1.1 to 2.4 million tonnes of demand by 2030. As covered in The 17.9-Year Lag, a single hyperscale AI facility can require up to 50,000 tonnes of copper, and the timing mismatch with new mine development (18 to 23 months versus 17.9 years on average) is the structural problem driving the deficit thesis.
The Grasberg Shock
The acute trigger came on September 8, 2025, when 800,000 tonnes of wet material rushed into Freeport-McMoRan's Grasberg Block Cave in Indonesia. Freeport declared force majeure on September 24 and guided 2026 production at the world's second-largest copper mine to be 35% below prior estimates, with full recovery not expected before 2027. Goldman Sachs subsequently estimated a 525,000-tonne supply loss across 2025 and 2026, flipping the 2025 balance from a 105,000-tonne surplus to a 55,500-tonne deficit. The ICSG now officially forecasts a 150,000-tonne deficit for 2026, the first structural shortage since 2009.
Tariffs Reshape the Map
On July 30, 2025, the Trump administration issued a Section 232 proclamation imposing a 50% tariff on the copper input value of semi-finished and intensive derivative products, effective August 1. Refined copper, ores, and scrap remain exempt for now. A Commerce Department update is due to the President by June 30, 2026, and could trigger a phased universal duty on refined copper, starting at 15% from January 1, 2027 and rising to 30% a year later. According to the Council on Foreign Relations, the United States imports roughly 45% of its copper, led by Mexico, China, and Canada.
Final Synthesis: The Other View, and What to Watch
Not every analyst is positioned for the rally to continue. Goldman Sachs Research expects copper prices to decline somewhat in 2026 from recent records, and S&P Global cites StoneX's Natalie Scott-Gray noting that LME net longs are approaching record levels while Chinese traders sit at their widest net-short since 2021.
Three upcoming developments are scheduled to shape the rest of 2026: the Commerce Department's June 30, 2026 report on refined copper, which will inform any phased tariff on cathode imports; Freeport's phased Grasberg ramp-up through 2026 and 2027, which will determine how much of the 525,000-tonne supply loss returns to the market; and ongoing signals from Chinese physical demand, where S&P Global cites StoneX flagging LME positioning approaching record levels alongside the widest Chinese net-short position since 2021.
