Summary of this article
Comex copper futures has gained close to 40 per cent YTD
Tariff uncertainty has led to copper being rushed into US warehouses, tightening supplies elsewhere and driving prices higher
Supply has come under pressure due to mine disruptions, years of underinvestment and stress in processing markets
At the same time, strong demand from EVs, clean energy and AI infrastructure continues to support prices
Analysts say copper has room to outperform on supply tightness and industrial demand
Analysts caution that if trade tensions ease or China’s slowdown deepens, especially in property, copper prices could see sharp corrections
Copper prices surged to fresh all-time highs on December 24, 2025, extending a rally led by supply stress and aggressive positioning in global markets.
The most-active copper contract on the Shanghai Futures Exchange rose 2.30 per cent to 95,080 yuan per tonne after touching a record high of 96,510 yuan earlier in the session. On the London Metal Exchange (LME), the benchmark three-month copper contract climbed 1.30 per cent to $12,220 per tonne, after hitting a lifetime high of $12,282.
In the US, February Comex copper futures jumped nearly 2 per cent to a record $5.63 per lb. The contract has gained close to 40 per cent year-to-date (YTD). In the domestic market, MCX February copper futures rose as much as 2.55 per cent to a new all-time high of Rs 1,198.20 per kg.
Why Are Copper Prices Rising
Following are the reasons behind copper’s rally:
Tariff Fears Distort Demand
The rise in copper prices has been largely triggered by uncertainty around possible US import tariffs.
According to Kaynat Chainwala, AVP – Commodity Research at Kotak Securities, tariff-related concerns have led to a large diversion of copper from LME and Asian warehouses into Comex-approved warehouses in the US. This has tightened supply in other regions and artificially boosted demand.
These flows, she said, are led more by policy uncertainty than by actual end-user consumption. The rush to move copper into the US has distorted trade flows and pushed prices higher in a short span.
Speculative buying has added to the momentum. Like silver earlier this year, copper has seen strong participation from futures traders chasing the trend.
Supply Disruptions Add To The Pressure
JP Morgan, in a November 28, 2025, note, said that the copper market has “tightened significantly” due to acute supply disruptions.
Years of underinvestment, declining ore grades, and limited mine expansions have left the copper market vulnerable to disruptions. Recent accidents and operational issues at major copper mines in Indonesia, Chile and the Democratic Republic of Congo have tightened global supply, the note added.
Chainwala said concentrate markets are extremely tight, with treatment and refining charges hovering near zero or even turning negative, a clear sign of stress that raises the risk of shortages in refined copper.
According to a Reuters report, China’s top copper smelters are also expected to cut output in 2026 to address overcapacity and distorted processing fees, adding to supply concerns.
Structural Demand Remains Supportive
Beyond near-term trade distortions, copper’s long-term demand outlook continues to stay strong, say analysts.
Justin Khoo, senior market analyst – APAC at VT Market, said copper consumption is being driven by electrification and energy transition themes. Electric vehicles use 3-4 times more copper than conventional cars, while renewable power projects and grid upgrades are copper-intensive.
Global refined copper demand is growing faster than mine supply, keeping the market structurally tight, he said.
Chainwala also attributed the rise in demand to the rapid build-out of AI infrastructure and hyperscale data centres, which use significantly more copper than traditional infrastructure.
Sentiment improved further after copper was added to the US list of critical minerals.
Can Copper Outperform Silver And Gold?
The rally has raised questions about whether copper can emerge as the next star performer after silver’s sharp run-up.
Silver futures on MCX are up around 157 per cent year-to-date (YTD), while gold futures have delivered nearly 82 per cent returns. Copper, in comparison, has risen about 40 per cent so far this year.
However, analysts say that copper’s rally is being driven more by supply tightness and industrial demand than by safe-haven or speculative flows alone. “Both copper and silver are supported by structural supply tightness and strong long-term demand drivers,” Chainwala said, adding that both metals could remain well supported next year if US tariff threats materialise.
Khoo believes prices can still move higher. By end-2026, he sees copper heading towards $5.25-5.75 per lb on Comex if deficits persist and electrification demand holds up, though he expects bouts of consolidation along the way.
Ajit Mishra, SVP – Research at Religare Broking, expects further upside, but says fresh records will depend on demand conditions. He sees MCX copper trading in the Rs 1,350-1,400 per kg range by end-2026, with upside to Rs 1,650 if tight supply and strong China demand persist. On Comex, he said a clear breakout above historical highs is possible if global inventories stay tight and China rolls out sustained stimulus.
What Are Risks To The Copper Bull Case
That said, copper’s rally is not without risks. Since prices have risen largely on supply-side fears and tariff speculation, any easing of trade tensions or normalisation of flows could release inventories back into the market, which could trigger sharp corrections.
Mishra warned that a sharper-than-expected slowdown in China, especially in the property sector, could cap copper’s upside. A stronger dollar, higher real interest rates or faster resolution of supply disruptions could also cool the rally, analysts say.
Copper Outlook 2026: Will Rally Sustain
With copper already trading near record highs, analysts advise caution at current levels. Khoo advised staggered buying or waiting for pullbacks rather than aggressive entry. Chainwala said corrective dips towards the Rs 1,000 per kg region could offer better entry opportunities, provided investors follow disciplined risk management and staggered buying.
Mishra echoed the view, suggesting long-term investors accumulate gradually in the Rs 950-1,050 range rather than chase prices at elevated levels.
Structural demand from electrification and tight supply conditions suggest copper could stay in focus in the coming year. Silver may have led the metal rally so far, but copper is increasingly emerging as the next metal to watch, though volatility along the way cannot be ruled out.
