Since the beginning of this year, "Dr. Copper" has continued to surge, once approaching a record high.

On January 14, the price of LME copper futures held steady above the $13,000 mark, with the intraday high reaching $13,406 per tonne. As of 18:00 Beijing time on the 14th, it was quoted at $13,186 per tonne; SHFE copper was quoted at 104,120 yuan per tonne. Over the past month or so, copper prices have experienced sharp fluctuations. LME copper once surged by 22% within the month and has now accumulated a 6.14% increase.

In fact, the signs of this round of copper price increase had already appeared in mid-November last year. Last year, mine accidents in Indonesia, Chile and other places led to disruptions in copper supply. Coupled with the expectation that copper demand growth will accelerate in the next few years, copper prices gradually "took off". Some analysts believe that the rise in copper futures prices reflects the outside world's expectation of a copper shortage. Looking back at 2025, copper prices have seen the sharpest upward trend in nearly a decade. Up to now, copper prices have continued the surge momentum since last year. A key variable may be that the threat of the United States planning to impose additional tariffs on copper imports has prompted traders to significantly increase copper exports to the United States in recent weeks, leading to a tightening of copper supply in other regions of the world.

Recently, Wall Street has been deeply divided over the future trend of this most important industrial metal in the world. UBS has warned that there will be a severe structural shortage in the copper concentrate market in 2026/27. However, this structurally bullish view stands in stark contrast to the short-term warnings from Goldman Sachs and Citigroup. Goldman Sachs Commodities Research has revised up its copper price forecast for the first half of the year from $11,525 per ton to $12,750 per ton, but it is unlikely to sustain above $13,000 per ton. Citigroup even stated that "January is likely to be the price peak for the whole year.

Amid the collision of bullish and bearish views, industry insiders are paying close attention to what other potential factors will affect copper prices next. Some market analyses have shifted from short-term macro games back to the essential issues of the industry: against the backdrop of surging demand driven by energy transition, does the global mining industry have the ability to provide sufficient copper? If the current performance of the copper market is just a false prosperity caused by panic over U.S. tariffs, will the market experience a drastic repricing after a short-term price increase?

Supply pressure causes "Dr. Copper" to take off

Copper, known as "Dr. Copper" due to its wide range of applications and sensitivity to economic cycles. So far this year, LME copper prices have risen by 6.19%, with the vast majority of the increase occurring in the past month, attracting market attention.

According to Wind data, since November 20, 2025, the price of London copper has risen from $10,686 per ton to $13,189 per ton, an increase of nearly 24%. Hu Daoheng, a senior researcher in the non-ferrous metals industry at Industrial Research, told a reporter from 21st Century Business Herald that the surge in copper prices this round is at an extreme historical level. Historically, there have been only three instances where the price has risen by a rate equal to or close to this level within 30 trading days. Xiao Chuankang, an analyst at the Copper Division of Shanghai Steel Union, also told a reporter from 21st Century Business Herald that the rise in copper prices has far exceeded market expectations, and there is an obvious emotional premium in the price, or in other words, the market trend has obviously shown signs of advance overdraw.

In the view of the experts interviewed, the rare surge in copper prices not only reflects the sharp increase in market demand, but is also disturbed by multiple factors behind it.

The current rise in copper prices is following the overall commodity uptrend, mainly driven by macro factors," Zhou Mier, Director of Macro Research at Chaos Tiansheng Research Institute, told reporters from 21st Century Business Herald. Since the start of 2026, ample global macro liquidity and the strengthening of equity markets have jointly driven copper prices upward; at the same time, the heating up of the precious metals market has further boosted copper prices. In addition, geopolitical factors have heightened market concerns about copper supply risks, and under this long-term main narrative, copper prices have surged significantly.

Hu Daoheng added that since Chile and Peru are major suppliers of copper mines, the tense situation between the United States and Venezuela has heightened market concerns about the vulnerability of mineral resource supplies in South America.

There is no consensus in the market on whether copper resources will face a shortage in the future. However, it is certain that the pressure on the copper supply side has been significant recently.

South America has long been a major source of global copper ore supply, but in recent years, copper production in South America has been quite disturbed. Although Chile is still the world's largest copper producer, its share in the global copper market has dropped from 30% to 24% over the past decade. Currently, the main growth points of copper ore production are gradually shifting from South America to regions such as Africa. Taking 2023 data as an example, the global mine copper production increased by about 3.6%, while the output growth rate of mine copper in Chile, a major copper-producing country in South America, was -1.5%. In contrast, the output growth rates of mine copper in the Democratic Republic of the Congo in Africa from 2021 to 2023 were as high as 34.2%, 25.6%, and 20.4% respectively. However, Africa's infrastructure level is low, which means that the construction and production periods of new supplies may be prolonged, and it may face development safety issues and supply interruption risks at any time.

The challenges in copper supply also stem from several mine earthquake incidents last year: at the end of July last year, the world's largest underground copper mine, El Teniente in Chile, suffered a mine collapse due to an earthquake; then in September last year, a large-scale wet ore flow occurred at Grasberg Mine in Indonesia, the world's second-largest copper mine, blocking the passage, and U.S. mining giant Freeport immediately suspended operations in the mining area.

Recently, the strike at Chile's Mantoverde copper mine has also been one of the triggers for the sharp rise in copper prices. Although the mine accounts for about 0.5% of global copper production, which seems like a small proportion, against the backdrop of already low global visible inventories, any reduction in supply will be amplified into an "available metal crisis".

Xiao Jing, chief analyst of non-ferrous metals at SDIC Futures, told reporters from 21st Century Business Herald that the copper mine supply side is facing dual pressures. On the one hand, large mines that were disrupted in 2026, especially in the first quarter, will find it difficult to significantly resume production; on the other hand, the low annual processing fees have intensified the game between mining companies and smelters, prompting smelters in China and Japan to announce cuts in raw material production capacity. She predicts that affected by these factors, the growth rate of global refined copper smelting in 2026 is expected to face significant downward pressure.

Delays in the approval of new copper mine projects have also affected copper supply. UBS notes that despite large miners becoming increasingly optimistic about the long-term prospects of copper and the relatively stable returns from new projects, the number of final investment decisions (FIDs) for projects between 2023 and 2025 remains low. Although the approval volume rebounded to approximately 800,000 tons in 2025, given the 3-4 year construction period, this pace is still insufficient to keep up with the growth in demand. UBS predicts that the copper market will enter a state of shortage in 2026/27, and the depletion of inventories will support further sustained price increases.

On the one hand, unexpected incidents at copper mines have made resumption of production difficult, and coupled with the slow approval of mining projects which makes it hard to keep up with the growing demand, these factors have led to a continuous shortage in copper supply; on the other hand, the continuous and rapid growth in copper demand has further widened the supply gap.

Previously, copper was mostly used in power facilities, wires, optical cables, batteries, etc. However, under the development trend of new energy transformation and the AI infrastructure boom, copper is ushering in "the dividends of the times". In terms of new energy, data shows that each electric vehicle requires three to four times as much copper as a traditional car. In terms of AI, copper is also a key component of data centers. Additionally, the massive power consumption for large model training and inference has forced the upgrade of power grids, which will all drive up copper consumption.

Distortions in copper trade flows

Currently, market judgments on the future trend of copper prices are polarized. Institutions such as Goldman Sachs believe that the rapid rise in copper prices in the short term is only due to the "structural tightness" caused by U.S. tariffs. Once the tariff path becomes clearer, copper prices will return to the "real state" of global supply and demand.

As evidence, the spot price of copper is higher than the three-month forward contract, showing a typical "inverted market". In this regard, Hu Daoheng said that the spot premium in the London copper market is a typical signal of extremely tight short-term supply and scarce spot liquidity. Specifically, LME copper registered warrants or inventories have dropped to an extremely low historical level, and buyers are willing to pay a high spot premium to obtain immediately available physical copper.

According to Xinhua News Agency, at the end of July last year, the Trump administration of the United States signed an announcement, imposing a 50% tariff uniformly on imported copper semi-finished products and derivatives with high copper content starting from August 1, excluding raw materials such as refined copper. Some experts analyzed that due to the serious shortage of actual domestic smelting capacity in the United States, the dependence on imported refined copper reaches 46%. If tariffs are imposed comprehensively, it may lead to a surge of more than 30% in the cost of domestic manufacturing industry, causing insufficient competitiveness of domestic products and the collapse of the industrial chain. Therefore, it is difficult to replace and promote in the short term. The United States' exemption of primary products such as refined copper is actually to ensure the stability and security of the supply of basic raw materials.

Affected by this, since July last year, traders have been rushing to ship refined copper to the United States, leading to a surge in copper inventories at the New York Commodity Exchange (COMEX) and driving the premium of U.S. copper over London copper.

Zhang Yichi, a non-ferrous metals researcher at Green Dahua Futures, also told a reporter from the 21st Century Business Herald that due to expectations of U.S. tariffs, spot supply in non-U.S. regions has tightened sharply. LME copper inventories in Europe are being moved to COMEX copper inventories, and the spot premium in the LME market continues to rise. The current supply tightness is actually a "false shortage," mainly because expectations of U.S. tariffs have forced inventories to be locked in and transferred, rather than an absolute global shortage. "If the United States imposes additional tariffs on refined copper in the future, it will further exacerbate resource tensions in non-U.S. regions.

Zhou Mier added that the current surge in copper prices is essentially the market pricing in response to U.S. tariff policies, and its sustainability is highly dependent on changes in relevant price spreads. Therefore, going forward, we need to be vigilant about the outflow of copper inventories in the United States, which may ease the tight situation in non-U.S. regions and thus impact copper prices.

The United States may impose import tariffs on refined copper in the future, which will become a key factor in changes in copper prices. According to CCTV News, on July 30 local time, the White House stated that U.S. President Trump signed an announcement. The U.S. Department of Commerce recommended imposing a 15% tariff on refined copper starting from 2027 and a 30% tariff starting from 2028. By June 30, 2026, the U.S. Secretary of Commerce shall provide the President with an update on the domestic copper market to enable him to decide whether to impose import taxes on refined copper.

Goldman Sachs stated that as long as tariffs remain a "future threat" and are not immediately implemented, domestic copper prices in the United States will maintain a premium over LME prices, driving continued stockpiling in the United States. For non-U.S. markets, this is equivalent to a tightening of supply. If tariffs are implemented earlier in the first half of 2026, U.S. stockpiling will stop, and LME prices will face a rapid correction.

If the United States sends signals of early tariff exemptions in the first quarter of this year, or if there is a significant drop in the long positions and net long positions of COMEX copper non-commercial and LME copper investment funds, it will indicate a decline in speculative sentiment and speculative funds, which may slow down the rising trend of copper prices," said Zhang Yichi.

The second quarter of this year will be a turning point for sentiment in the copper market." In its report, Goldman Sachs raised its forecast for LME copper prices in the first half of 2026 from $11,525 per ton to $12,750 per ton, citing that inventories outside the United States are tightening due to capital inflows and supply flowing to the United States. However, the bank kept its forecast for the fourth quarter of 2026 unchanged at $11,200 per ton, which means copper prices will face significant downward pressure in the second half of the year.

Can "replacing copper with aluminum" ease the high copper price?

Against the backdrop of the continuous rise in copper prices and the imbalance between market supply and demand, "replacing copper with aluminum" is quietly becoming the choice of more and more industries.

Copper is an important raw material for air conditioners, and the rise in copper prices has a significant impact on the terminal air conditioner market. In December last year, 19 air-conditioning enterprises including Haier, Midea, Hisense, Aux, and Xiaomi jointly announced their participation in the self-discipline convention on the application of aluminum strengthening, prohibiting malicious attacks and scientifically publicizing the characteristics of air conditioners with aluminum heat exchangers. The reason why these enterprises joined this self-discipline convention is that after the rise in copper prices, they hope to reduce costs through "replacing copper with aluminum" to ensure the safety of the air-conditioning industry chain.

In fact, several industries are gradually realizing the "replacement of copper with aluminum". First of all, in the field of power transmission, the replacement of copper with aluminum has entered a mature application stage. For a long time, aluminum conductors (steel-cored aluminum stranded wires) have completely replaced copper conductors in long-distance transmission lines and are widely used in the power supply of 5G base stations and data centers. Secondly, the automotive industry is one of the fields with the greatest technical difficulty but the fastest progress in "replacing copper with aluminum". In August 2025, TE Connectivity (TE) and Boway Alloy announced that they had overcome the technical difficulties of "replacing copper with aluminum", developed a new aluminum alloy material, completely solved the problem of electrochemical corrosion, and optimized the creep performance to a level close to that of pure copper.

However, many experts interviewed have warned that although "replacing copper with aluminum" seems like a shortcut, its actual implementation still faces many obstacles. Hu Daoheng said that "replacing copper with aluminum" will hardly make effective progress in the short term. Taking the home appliance industry as an example, the bottlenecks in using aluminum tubes instead of copper tubes in domestic air-conditioning heat exchangers lie in the high power consumption caused by aluminum's low thermal conductivity, the risk of leakage due to poor corrosion resistance, and the high after-sales costs resulting from the difficulty in aluminum welding.

Zhang Yichi also believes that the negative impact of "replacing copper with aluminum" on copper prices is very limited. "Replacing copper with aluminum" will only reduce copper demand in a few typical scenarios. Copper is irreplaceable in high-performance and high-reliability scenarios such as precision electronics and high-frequency signal transmission. Demand in data center construction, power grid upgrades, electric vehicles, and renewable energy installation remains strong. He predicts that the global copper market will shift from surplus to shortage in 2026, but different institutions' forecasts for the gap range from 50,000 tons to 600,000 tons, indicating significant differences in the market regarding supply elasticity and demand resilience. High copper prices are stimulating the rapid growth of recycled copper production. If the supply of recycled copper exceeds expectations in 2026, it may alleviate part of the pressure from the gap.

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