Copper on fire: Why prices are at record highs and what’s next

Copper has sprinted to fresh all-time highs in late 2025, with LME three-month prices repeatedly testing the psychologically important $12,000/tonne mark, while Indian futures have surged above ₹1,240/kg. The rally reflects an unusual combination of structural demand, acute supply frictions, and policy-driven distortions that have reshaped trade flows.

What’s behind the sharp rise in international markets?

Policy and macro tailwinds. The US Federal Reserve’s 2025 easing cycle (three consecutive 25 bps cuts) lowered real yields and buoyed risk appetite across commodities. Copper hit successive records after the December cut as traders priced stronger US growth and cheaper financing for capex-heavy industries like grids, manufacturing, data centers.


Trade-policy arbitrage and stockpiling. Fears of US import tariffs on copper created a premium for COMEX versus LME, drawing vast tonnages into US warehouses and tightening supply elsewhere. COMEX stocks surged to multi-year highs while LME inventories fell, distorting the physical market and pushing LME prices higher despite localized comfort in the US.

Supply disruptions. 2025 saw an exceptional string of mine setbacks. Indonesia’s Grasberg underground operations halted after a deadly mud rush, and Chile’s El Teniente suffered tunnel collapses and downtime, signaling stress along the raw-materials chain and reinforcing the bull narrative.

Structural demand from electrification & AI. The energy transition, EVs, renewables, grid expansion and the data-center buildout for AI are copper-intensive. The rising demand growth, with China’s grid investment and global power-infrastructure upgrades, is anchoring the bid. Investors have also piled into new copper-backed products, amplifying momentum.

Global supply-demand: deficit now, fragility ahead

Mine side supply of copper is unusually fragile. Reports point to a deficit of 124–230kt in 2025 and a deeper shortfall expected in 2026 as mine issues linger and inventories are siphoned to the US. The tariff-driven stockpiles and mine outages have complicated the picture and created regional tightness despite global balance estimates.

Meanwhile, exchange stocks jumped on COMEX but fell on LME and declined on SHFE during parts of 2025, confirming the US-centric stockpiling and tightness elsewhere that supported LME prices near $12,000/t.

How did Fed rate cuts and the dollar affect copper?

Lower rates typically weaken the USD and cut financing costs, historically supporting industrial metals. Copper rallied immediately after December’s cut on improved US growth projections and easier policy, while the prospect of further 2026 easing kept the dollar under pressure, providing a tailwind for dollar-priced commodities.

The US tariffs also affected the sentiment. Both the announced tariffs on copper products and the ongoing review of refined copper reshaped flows. Traders raced to move metal into US warehouses to front-run potential levies, lifting COMEX inventories above LME for the first time since 2022 and maintaining a sizable COMEX-LME premium. This diverted copper away from the rest of the world, tightening ex-US supply and lifting LME prices.

Indian prices at record highs, reasons beyond global factors

India mirrors global dynamics but adds local demand and policy. India has reported more than 9 percent demand growth for copper in 2025. This was led by infrastructure, building construction, renewables, consumer durables, and clean mobility. That’s real end-use pull for wires, cables, transformers, and motors, supporting MCX prices even when global spreads gyrate.

Since the 2018 Sterlite closure, India has relied more on refined imports. In late 2024-25, copper cathodes tightened access and changed sourcing patterns, while authorities flagged new smelter capacity to cut import reliance, causing a raise in local premium during transition periods.

Strategic supply efforts by the Indian government underscore the structural tightness and the country’s rising need for copper, resulting in domestic scarcity pricing when markets are tight.

Although the broad outlook remains bullish, there are expectations of volatile prices in 2026 as the market toggles between tariff policy, mine recoveries, and still-healthy demand. However, any policy-induced surplus, faster scrap/refining additions, softer China demand, or a stronger USD is likely to negate the bullish outlook.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)