Summary of this article
Copper prices reached a historic 13,042 per metric ton on the LME due to supply shocks in Chile and Indonesia.
Structural demand from AI data centers and electric vehicles is projected to create a 3,00,000 ton deficit in 2026.
Analysts recommend a buy-on-dips strategy for retail investors, suggesting exposure through copper mining stocks or commodity-themed mutual funds.
Commodities gained significant investor interest in 2025. While the rally in gold and silver drew investors, the conversation is expected to shift to copper and other commodities soon. Benchmark copper prices hit a record high on the London Metal Exchange(LME), surpassing the $13,000 per metric ton mark for the first time.
Copper surged 4.6 per cent to a record high of $13,042 per metric ton on the LME. Three-month Copper futures gained 3.1 per cent to a record high of $13,387 a ton in London. Earlier on December 29, 2025, the metal surged to a record high of $12,960. On the COMEX, copper prices surged to a record high of $6.11 per pound. In India, copper futures with January 30 expiry gained 1.6 per cent on the MCX, climbing to Rs 1334.7 per kg.
Why Are Copper Prices Rising
The rise in copper prices follows simultaneous supply shocks along with geopolitical shifts.
Tariff Rush
On January 5, traders shifted metal into the U.S. COMEX warehouses amid concerns over the imposition of trade tariffs on the import of the metal, according to a report by Trading Economics. Earlier in 2025, the Trump administration indicated that the temporary "free pass" for raw copper cathodes would end, and a 25 per cent base tariff would be applied to refined copper.
Traders are moving copper to COMEX warehouses to conduct arbitrage. Notably, the price of copper on the COMEX has risen higher than the LME. By purchasing copper at LME prices and moving it into COMEX warehouses, traders are attempting to "lock in" the metal inside U.S. borders before the 25 per cent tariff is applied. Once the tariff is enforced, the price of the copper already inside the U.S. is likely to go up. According to the report, the shifting of copper from London and Shanghai has led to a shrinkage in supply in Europe and Asia, which has contributed to the price rise.
Escalating Mine Disruptions
Production halts have also added to supply-side issues for copper. According to a report by news agency Reuters, on January 2, a strike by hundreds of unionised workers at Capstone Copper’s Mantoverde mine located in Chile led to a halt in production. The strike followed a failed mediation with the Chilean government to reach a new collective bargaining agreement.
Notably, the strike has reached its fifth day with Union leaders stating that they are prepared for a long-term standoff. While the contribution of the mine itself has added to the supply-chain disruption, the report suggests that this strike is being seen as a "bellwether" for labor relations in Chile and could lead to further such strikes. Earlier on September 8, 2025, approximately 8,00,000 metric tons of wet material collapsed into the Grasberg Block Cave (GBC).
The market is still absorbing the effect of the tragic incident at the Grasberg facility operated by Freeport-McMoRan. Freeport projects that its 2026 copper output will be 35 per cent lower than originally forecast, and full-scale production is not expected to start until early 2027. Amid these supply-side disruptions, brokerage firms UBS and Citi project a refined copper deficit of over 3.00,000 tons for 2026. This has further increased the dearth of copper and contributed to its rise in prices.
Safe-Haven Demand
Investors are factoring in the U.S. military strike on Venezuela and the capture of its President Nicolás Maduro. This, in turn, has led to concerns over "mineral security" and an uptick in demand for commodities, leading to investors parking capital in commodities like copper, gold, and silver.
The "AI and EV" Structural Demand
The current rally in copper prices is underpinned by the massive capital expenditure required for the establishment of AI data centers and a global shift in electrification. While traditionally sectors in the infrastructure space have led the demand for copper, there's a shift towards tech companies driving the demand for the ‘red’ metal.
The construction of AI servers requires copper as its inherent high conductivity makes it usable for power cables, busbars, and advanced liquid cooling systems. According to a report by JP Morgan, demand from data centers for copper is projected to grow by over 1,10,000 tonnes in 2026 alone, reaching nearly 4,75,000 tonnes annually. Additionally, the adoption of electric vehicles and renewable energy is also adding to the demand for copper.
What Should Investors Do
Aamir Makda, Commodity and Currency Analyst at Choice Broking, told Outlook Money that the current rally in copper is not a speculative bubble. On the other hand, the price rise is driven by a structural shift in demand and a supply deficit.
“Currently, "Red Metal" is trapped between a generational rise in demand and an extended supply deficit. The 2025 copper rally, which saw prices exceed $13,000 per metric tonne for the first time in history, radically altered the market narrative. While a 50 per cent plus yearly gain generally screams "bubble," the underlying data indicates that we are witnessing a structural shift rather than a speculative rush,” Makda said.
Makda added that investors can consider waiting for a dip to increase their allocation to copper. He added that the metal has already gained 3 per cent in the first six days of 2026.
“For short-to-medium-term investors, a 'buy-on-dips' strategy remains the most effective way to play the current copper market. Building on a three-year rally, the metal has already climbed 3% in early 2026,” Makda said.
Hareesh V, Head of Commodity Research, Geojit Investments, told Outlook Money that retail investors should avoid chasing momentum or being swept by the fear of missing out amid the rally. He added that a correction is plausible if macro conditions tighten.
“While structural drivers support long-term bullishness, the recent surge reflects tight supply and speculative flows, making near-term valuations stretched. A correction is plausible if macro conditions tighten or supply disruptions ease. Retail investors should avoid chasing momentum and instead wait for pullbacks or accumulate gradually through staggered positions,” Hareesh said.
He added that investors who do not wish to gain exposure to the metal via MCX can do so by adding stocks of copper and metal mining companies. Additionally, they can also consider diversifying through commodity-based mutual fund investments.
“The most effective way for retail investors to gain exposure to copper is by investing in stocks of copper and metal mining companies. Additionally, they can diversify through commodity-themed ETFs and mutual funds,” Hareesh said.
